Cost Innovation: Preparing for a 'Value-for-Money' Revolution

Some of established businesses' most ubiquitous and profitable business models are increasingly being challenged by a new breed of emerging market players. Rather than simply focusing on cut-priced, undifferentiated offerings, emerging country multinationals are deploying their cost advantages in creative ways to deliver high technology, variety and customisation at minimal price premiums, and to redirect niche offerings towards volume segments. This amounts to the emergence of a new type of generic strategy: 'cost innovation'. Meanwhile, fundamental changes in global market structures are afoot which favour these new business models, and the confluence of these forces is creating a global 'value-for-money' revolution. Incumbents will require new types of responses to survive and prosper - but the pre-requisite for any effective response is a shift in mindset about the new business models required to succeed in the future. (C) 2009 Elsevier Ltd. All rights reserved.