Twenty-five years ago, multinational corporations confronted an affordability crisis of their own. Emerging economies were growing at three to four times the rate of developed economies—a gap that persists today, with emerging markets still expanding roughly twice as fast. The collective purchasing power of billions of potential consumers, together with a growing middle class in emerging markets, presented an enormous business growth opportunity—the opportunity C.K. Prahalad famously framed in his 2004 book, The Fortune at the Bottom of the Pyramid.

Many multinationals stumbled at first, either offering rich-market solutions to poor customers or stripping out features to create cheap product variants. The companies that succeeded focused on delivering value—products that offered the core performance and quality users desired at a price point they could afford. They achieved this by assessing the unique requirements of emerging-market users and designing solutions to suit their wants and needs.

Affordability now stands as the key issue heading into the upcoming midterm elections. Families, reeling from years of price hikes and inflation following the pandemic—a stretch that pushed U.S. consumer prices up at their fastest annual pace in roughly four decades—are desperate for products and services they can afford—but that are not “cheap.” This is an era in which companies must find solutions that are not just lower-cost but higher-value, offering adequate or even improved performance at a lower price.

Three exhausted strategies

Several affordability strategies in America have already been exhausted, and if pursued further, they may turn customers away or cause economic havoc.

The first is what the authors call “Costcofication.” Costco’s business model is predicated on making products more affordable through bulk sales. The company does not compromise the performance or quality of name-brand products; instead, it leverages economies of scale in packaging. Consumers can buy their favorite Coca-Cola beverages, Charmin toilet paper, and Dawn dish soap—so long as they want them by the case. This sales model has scaling limits: it is unlikely consumers will want to tow a tanker full of Skippy peanut butter home. It also depends on shoppers being able to afford a Costco membership and the large payout for bulk purchases, and having room at home to store them. Costco is already inaccessible to many Americans: the average household income of its members is $125,000 a year, while the median income for the country is $80,000 a year. That tilt is structural—Costco’s economics lean heavily on membership fees, which typically account for more than half of its operating profit, rather than merchandise markups, so the model rewards serving households that can pay upfront and buy in volume.

The second cost-saving strategy, likely maxed out, is “Walmartfication.” Charles Fishman’s 2006 book, “The Wal-Mart Effect,” documented how the company often pressures its suppliers to lower quality in order to achieve affordability through “everyday low prices.” Suppliers have gone so far as to design look-alike but cheaper versions of popular brands to meet Walmart’s demands—such as Levi Strauss’ “Signature” jeans, which use lighter-weight denim than the premium Levi’s brand. Lowering the quality and performance of products further to make them more affordable could damage brand reputation, dissatisfy consumers, and hurt Walmart’s bottom line.

The third cost-saving strategy is “Taxpayerfication.” This occurs when the government makes services more affordable to consumers by subsidizing costs, only to turn around and have them pay for it anyway through tax increases. The strategy gives only the appearance of improved affordability, either by placing the financial burden directly on society or by kicking the can down the road through a growing national deficit that Americans must someday pay. The real issues behind the national affordability crises in healthcare, housing, higher education, and childcare are spiraling costs. Without addressing costs directly, shifting who pays them will not change the underlying problem or save society any money.

The emerging-market playbook

Innovators must look at the new, affordable products and services Americans demand with fresh eyes. Adapting existing offerings will likely not work; disrupting them is the only way to address the affordability crisis. What is needed are solutions that deliver high performance at low cost, offering value to consumers. Fortunately, a playbook already exists from which there are many lessons to learn: innovating for emerging markets.

When GE Healthcare set out to sell CT scanners in China and India, its premium Revolution scanner—costing roughly $650,000 to manufacture—was a nonstarter. Rather than strip features, GE followed a “reuse, revise, redesign” discipline: it reused amortized components such as the base structure, patient table, and software. It identified the image detector as a pain point driving cost, because the Revolution scanner used 128 curved X-ray collectors that could capture the contours of a patient’s body. Rather than relying on expensive hardware, GE utilized only six much cheaper flat detectors and invested in improved software to render accurate 3D images. The resulting Brivo CT scanner could perform 75% of the CT procedures that the Revolution could, at a manufacturing cost of only $56,000, making it a commercial success across emerging markets. GE’s approach became a defining case of what business scholars later dubbed “reverse innovation”—designing frugal, high-value solutions for emerging markets first, with designs that can ultimately flow back into wealthy ones.

Gillette initially tried, and failed, to launch the Vector razor in India—a model considered “cheap” in the eyes of Americans because it was old and obsolete, yet still far too expensive for the Indian mainstream. The company quickly wised up and realized it had to understand the unique requirements and value propositions of Indian users. Gillette sent its engineers into consumers’ homes, logging 3,000 hours with more than 1,000 men, and discovered that Indians shave differently than Americans: less often, with thicker stubble, seated in dim light, and rinsing in a cup rather than under running water. Gillette then designed the Guard with bump-flattening ribs to avoid cuts and the stress of shaving in low light, and large flush channels to clear hair particles with a little swishing. The Guard has only four parts to keep the price down; it sold for about 25 cents, with blade cartridges at roughly 8 cents. Within four years, the Guard accounted for two of every three razors sold in India.

Peru’s Innova Schools show the same innovation approach applied to high-value education. Chairman Carlos Rodriguez-Pastor and his team elucidated four requirements for improved schools in Peru: tuition no higher than $130 a month, quality equal to or better than the country’s $15,000-a-year private schools, a model scalable to hundreds of campuses, and profitability. Working with the design firm IDEO, Innova Schools built a “flipped classroom”: 70% teacher-led group work and 30% self-directed online learning, supported by a central library of more than 20,000 lesson plans. This model enabled less-expensive teachers to deliver top-tier results, while modular, reconfigurable buildings slashed construction costs. Today, Innova Schools students outscore both public schools and far pricier private ones. In 2025, 63 Innova Schools in Peru served 64,000 students, with 20 additional schools operating in Mexico, Colombia, and Ecuador.

Each of these solutions delivered the core performance customers wanted at a fraction of the price of prior offerings. This disruption was achieved by understanding the unique requirements of emerging-market customers and tailoring solutions that delivered the right price and performance. America’s innovators should run this playbook at home to create the affordable, valuable solutions the public demands. The clearest test will come in the sectors where costs are spiraling—healthcare, housing, higher education, and childcare—where success will mean attacking the cost structure itself rather than shifting who pays it.

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