Frugal innovation drives bigger profits | KPMG | SG
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Frugal innovation drives bigger profits

Frugal innovation drives bigger profits

How to take an end-to-end approach to success.


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Changing consumer demands and demographic shifts that are increasing product portfolio complexity are disrupting traditional business models at all levels of the supply and demand curve. A lot of companies struggle with too many or unprofitable stock keeping units, and products that are too expensive for growth markets.

Today’s successful businesses need to manage their product portfolio in order to combat these challenges by balancing market requirements and product profitability. Product innovation doesn’t necessarily need to be complex, costly or ‘revolutionary’ to generate significant new levels of competitiveness, growth and profitability.

Frugal Innovation means tailoring products to suit a market need

Our end-to-end approach to frugal innovation has been designed to create – from the ground up – competitive products that can help deliver optimized production processes, costs, value and profitability. And while the concept of frugal innovation is not new, more businesses are realizing its advantages.

As more companies are discovering, ‘frugal innovation’ initiatives can rapidly position them to successfully launch new products in emerging and also mature markets with reduced cost and risk to meet these demands. These companies are typically seeking sustainable growth and entry to new markets and geographies while struggling with the challenges of increased competition, shrinking market share and fierce cost pressures.

Taking an end-to-end approach to success

An in-depth analysis effectively gives clients a software and tool with a 360-degree view of their target markets, current and emerging trends and competitors, including the analysis of selected competing products. The software and tool are designed to provide a clear understanding of what’s required for success stories and the ability to confidently map out a new product’s concept and design, ultimately helping deliver exactly what customers are seeking in terms of product features, functionality, price and value. Beyond the concept and design stages, companies rely on the frugal innovation process to map out a cost- and time-efficient program for product implementation, including best processes, value chain and marketing. A German company producing a new product for the market in India, for example, may realize that the best geography for manufacturing the product efficiently is in India, using local resources and expertise, rather than existing facilities in Europe.

Creating new products more efficiently

Our success in frugal innovation continues to grow with a 2016 notable win by KPMG in Germany of ‘Best of Consulting’ from Europe’s WirtschaftsWoche. And while we offer an end-to-end approach to frugal innovation, it’s not unusual to engage a client at any stage of this innovation process by addressing a particular design challenge requiring immediate attention. A client seeking guidance to quickly alter a current product design by focusing on a reduction of production costs may soon realize the advantages of taking a step back. As a result they will be able to closely examine and analyze current and emerging customer demands and market conditions, in order to better meet both with an improved design innovation.

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