Over the last three years, our team has done market research and feasibility studies for organizations looking to establish their business presence in the Nigerian market.
Getting credible market information in Nigeria is like piecing a complex puzzle together. Although data collection can be challenging, our experience has revealed how important it is to perform extensive due diligence to facilitate business development in Nigeria. It helps organizations understand and uncover any unmet needs in the market and really drill down on their ideal customer base so that businesses can build successful strategic plans to efficiently reach their business goals.
Getting credible market information in Nigeria can be challenging because a lot of the data that businesses seek are not consolidated. A business builder has to go and extract this information from fragmented sources and use it to build a plan for their business. Here are some methods that weâve learned along the way on how to perform a market and feasibility study for your business.
Desktop Research
Searching for information online is usually a good place to start. By doing some research with your preferred search engine, you can establish your baseline on the type of information that is already available and the type of information that you will have to go out and extract yourself.
You would want to use this as an opportunity to get high-level information such as the total market size of the industry that your business is in. Youâd also want to search for any reports that have been published on your industry in Nigeria. Be sure to check the publication date on the data that you find, anything within the last 2 – 3 years from the date of your feasibility study will give you a good estimate of the current state of the market.
Make sure these reports are written by credible sources because youâd want to be able to reference your sources once you start building your marketing plan. A good source of information is the Nigeria Bureau of Statistics. Depending on your industry, it can be a source of frequently updated market information.
Market Feasibility Surveys
There is no better way to get market information in Nigeria than actually going to where your market is. This is where you do âon-groundâ data collection. A lot of times, this means going to an open market or supermarket where products are being sold. This is particularly important for Business-to-consumer (B2C) businesses.
To effectively do this, find one or two cluster markets where your proposed target customer will shop at, and then visit those markets. State your intentions to the retailers and let them know that you are there to find out what types of products are being sold. Interview them to figure out the products that customers usually buy and get a basic understanding of the trends that they are witnessing in the market.
The insights that you will receive from the face-to-face interactions will be priceless. Make sure you go there with a predetermined set of questions. An example of a feasibility questionnaire is as follows:
- What are the products that have the highest turnover?
- Why do customers keep asking for those top products?
- What are the prices for the different products being sold?
- Whatâs the profile of the typical customer and their purchasing power?
- What are the main challenges customers have when they request the product?
Not all store owners will be responsive to your questions. A referral from someone they know will be very helpful. Make sure you remain polite and respect their space and time.
Customer & Expert interviews
Another way to gather market information is to interview prospective end-users and industry experts. Customers will give you a clear sense of exactly what they are looking for. Very valuable insights can be gathered about the feasibility of your business when you ask a customer about a competing product that they use.
Ask very clear and direct questions like âwhat exactly do you like about {competitive product A}?â and âwhat are some of the challenges that experience with {competitive product B}?â. These type of questions will allow you to identify whether thereâs a space thatâs left for you to position your product and gain some market share.
Also gathering insights from industry experts is another great source of credible market information. The knowledge that these subject-matter experts have gathered over the years is a resource that you can easily tap into to understand the pitfalls to avoid and the best pathway to success for your business.
This type of research is particularly useful in Business-to-Business (B2b) models, where there might not be a clear (or physically obvious) marketplace where your products or services are being sold. Youâd have to seek out the decision-makers in these industries to gather insights about the feasibility of your business. The challenge here is getting these busy experts and customers to trade their time to help you with your business.
A good way of finding customers and industry experts is to attend industry conferences, panels, and forums. These events are usually a good place to meet people in your industry and its an effective way to gather insights for your business. Referrals from your network are also very important.
Syndicate Your Information
Once you start gathering information from the three methods stated above, make sure you are documenting your data every step of the way. Since there isnât a lot of readily available databases of information, your job is to aggregate that information for your business.
You may not be able to get exact and precise information about the entire Nigerian market but with a good dataset, you can make a few assumptions that will be sufficient enough for you to build a good marketing plan.
Here are some basics that you want to get from your feasibility study:
Market Size: What is the total addressable market size for your business in Nigeria? Use the information that youâve collected to make a defendable case as to the size of the market and its potential in the long term (i.e 3 -10 years).
Competition: Who are your main competitors? Make sure you know what segment of the market your product is going to be in and then find the main competitors in that segment. Remember that you are not competing with everyone in your space. If your product is a premium product, then low-priced products are not your immediate competition, especially when starting out.
Pricing Analysis: What are the current prices in the market? As an add-on to your competitive analysis, make sure you are aware of the prices of similar products in the market. Nigeria is a very price-sensitive market and pinpointing the right price will bolster your marketing plan and determine the feasibility of your business.
Distribution Landscape: What are the main marketing and distribution channels for your products and services? This will help you identify the key markets where you should focus on and strategic partners that you should work with.
Barriers to Entry: What the main factors that will limit your success and hinder the feasibility of your business in this market? Although as a business builder, you have to have an optimistic mindset to succeed, that does not mean you should lose objectivity. Make sure you are clear on the factors that will hinder your business from being successful and develop processes to overcome each barrier ahead of time.
Build Your Market Feasibility Report
Use the steps above to gather credible market information as a way to determine the feasibility of your business. Use the insights gathered from your market feasibility study to develop a solid business plan. With a clear business strategy, you can develop a unique business model, and innovate that model continuously, to meet your business goals in the Nigerian market.
