Marketing research paper

PART 1: COUNTRY SELECTION AND EVALUATION

1.A. Country Selection

The table below is a country selection matrix that compares the medical markets of five Africa countries: Nigeria, Cameroon, Ghana, South Africa, and Kenya. Our client, Devon, is looking to introduce their negative pressure wound therapy device to Nigeria. Yet, before entering we did a quick analysis of four other markets within Africa that could potentially be a better alternative. 

Each country was given a weighted score based on 13 criteria which all fell under four main categories: market size, geographic indicators, economic indicators, and ease of doing business. These categories and criteria were based on relevancy to the medical industry as well as relevancy to the product Devon is looking to introduce. Each criteria was scored on a scale of 10. 

The scores were produced based on the rankings each country had within Africa. The math involved taking the county’s rank in Africa minus the total and divide that number by the total to get the score. For example, for South Africa their rank in GDP is 7 out of 55 countries ranked. Thus we would take 7-55= 48. We would then take this number and divide it by 55 to get .872 which would come to 8.72. 

1.B. Country Evaluation

1.B.1 Geography

      Officially, Nigeria is a West African state that borders Niger in the north; Cameroon in the east; Benin in the west, & Chad in the northeast, all by water. Ghana, Equatorial Guinea, and Sao Tome and Principe connect by sea (OEC, 2017). The nation is the most crowded in Africa. The Niger River enters the nation in the northwest and streams southward through tropical downpour woodlands and bogs to its delta in the Gulf of Guinea. Nigeria weighs nearly six times Georgia's size; marginally more than twice California's size. Nigeria stretches over 923,768 square kilometers of land and water, and covers 853 kilometers of coastline (Central Intelligence Agency, 2019). Nigeria has the Bonny Inshore Terminal, Calabar, and Lagos as it’s three principal ports. These ports offer substantial export prospects for the tools and services of NPWT’s devices and products, and particularly for trade. Nigeria has a seasonal, warm and rainy tropical climate (Britannia, 2018). Nigeria's climate usually consists of two seasons: wet and dry. The wet season (summer) is typically April through October and the dry season (winter) is between November and March. Nigeria can be classified into three regions by weather zones- the far South, the far North, and the rest of the country. The far South is marked by a rainforest tropical climate with average rainfall between 60 and 80 inches per year. Although the far north is wilderness-like, precipitation is less than 20 inches. Savannah distinguishes the rest of the country between the far North and far South with precipitation of 20 and 60 inches per year. Most of the year it is hot and humid in the southeast, but chilly in the south west. The north and west is dominated by the savannah climate with intense wet and dry seasons, whereas the extreme north is concentrated by steppes with low rates (USA Today, 2018). 

        Despite the economic problems of the past two years, Nigeria nevertheless remains at a small margin, the largest economy in Africa. An estimated population of 180 to 203 million is of great interest to entrepreneurs, producers and exporters all over the world, particularly in their consumer market. Nonetheless, given Nigeria’s promising opportunities for exporters, it can however be a struggle to get a product on the market (Games & Maritz, 2017). 

          

1.B.2. Demography

Nigeria is the 32nd largest country in the world, geographically, with a span of 356,669 square miles; it has an estimated population of 202.2 million people, making it the 7th most populous nation in the world. The country's population growth rate is 2.6%, which is significant because of its  impact on the consumer market. The largest age segment in the country, representing approximately 30.7% of the population, is between the ages of 25 and 54 years old, and the median age is 18.4 years (World Population Prospects, 2019). The case can be considered as an advantage to the client, SureShade since most people are within the age bracket, which could be interested in the company's products. The majority of individuals in the age bracket could be interested in the products since are likely to have some relaxing time especially after work and after school, and thus acting as an opportunity for a larger consumer base. 

  

                                    Source: World Bank

More than half  of the population in Nigeria resides in rural areas, while about 48% of the population resides in urban areas, though urbanization is gradually increasing. Though the population is unevenly distributed, there are roughly 556 people per square kilometers, an ideal population density for market consumption (World Populations Prospect, 2019). According to World Bank reports, 68% of individuals above the age of 15 are literate with 75.7% being literate, and 60.6 females. Nigerians spend approximately 17 years in educational institutions, from primary to tertiary levels (World Bank, 2019). This proves that most of the individuals in the country are literate, which is an opportunity for any kind of business since it means that most individuals are financially empowered. Nigeria is classified at a lower-to-middle income status based on factors like communication, transportation, and infrastructure, making the country a conducive environment for investment. What does this mean for the product? Is this good for finding future distributors? How many people could really make use of the product? Just need to wrap up the relevance of the data.

1.B.3. Culture

Nigeria is comprised of many, diverse groups of people that form one culture. Traditions, cultural practices, and belief systems  influence a group of people’s way of life and conduct, especially in business and social activities. For example, the traditional and cultural beliefs of Nigerians are considerably at variance with those of Japanese, Britons and Americans. Familiarization with such diverse foreign cultures, traditions, beliefs, and practices is necessary for international business entrepreneurs (Trompenaars & Hampden-Turner, 2011). This is helpful for inculcating mutual understanding and embracing partners irrespective of different cultural backgrounds for the sake of harmonious business relationships, thus fostering diversity and inclusivity.

Nigeria falls among developing nations situated in the western part of the African continent. Culturally, the country boasts a rich and diverse culture rarely matched by others in the region. It has over 250 cultural groups alongside over 500 active languages, and is much more multiethnic and diverse the country is in comparison to others, like Japan (British Council, (n.d).  Of these ethnic groups or languages, the three dominant ones are the Hausa/Fulani people found in the north, the Igbo people in the southeast, and the Yoruba people in the southwest (NEED CITATION). Each ethnic group exhibits distinct cultural practices and belief systems. Muslim and Christianity are the two dominant religions in Nigeria, with the former more concentrated in the north, while the latter is more highly concentrated in the south. People still value and revere religion, keenly adhering to various religious teachings, doctrines, and practices, and therefore attend religious functions in large numbers.

Locals normally blend modernity with indigenous cultural practices. This happens in terms of dress code, methods of producing goods and services for domestic and commercial purposes. Moreover, respect for elders or those higher in authority or the hierarchy is emphasized and either questioning or challenging their wisdom or decisions is prohibited (British Council, n.d). It is largely a patriarchal society, where women are perceived as lesser beings and therefore do not participate in crucial decision-making. Men and women are treated very differently in business environments in Muslim-dominated regions, than in those influenced by Christianity. Above all, they are hospitable, value etiquette, mannerisms, and good grooming.  They are recognized in the continent for being leaders in the movie industry through Nollywood, the Nigerian movie industry.

There is a relatively high rate of competition in the business field, with low levels of technological development. With a high rate of unemployment and slow economic and developmental growth, coupled with scarce natural resources due to rapid population growth, consumers prefer bargaining in the marketplace to get high value goods and services at lower rates (Trompenaars & Hampden-Turner, 2011). Traditionally, business and/or formal meetings are frequently interrupted by phone calls and visits by clients, friends, and family members, which interferes with privacy and confidentiality. Additionally, the majority of businesspeople are not time-conscious and therefore meetings usually commence after their scheduled times.

1.B.4. Economy

The Nigerian Naira (NGN) has significantly lost value recently; one United States dollar (USD) was exchanging for 160 NGN in 2014, but has been exchanging for about 360 NGN since 2017 (Xe, 2019). The weakening of the Naira did not add value to the Nigerian economy as expected because the nation also experienced a decline in oil production and a fall in global oil prices. With a nominal GDP of $1.21 trillion (2017), Nigeria’s economy is the largest in Africa, and is ranked 24th in the world (CIA, 2019). GDP per capita in 2017 was $5,900. Real GDP growth in Nigeria in 2015 was 2.7%, followed by -1.6% in 2016, and finally 0.8% in 2017. It is projected that the real GDP growth rate for the year 2018 will be 1.9% and 2.5% in 2019 (PwC, 2019). The inflation rate in Nigeria has been dropping gradually but it is still high at 15.7% and 16.5% in 2016 and 2017, respectively (CIA, 2019). In mid-2018, the inflation rate fell drastically to about 11% and has fluctuated around this value since (Carvalho, 2019). 

The economy of Nigeria suffered an unsteady decline between 2010 and 2016 (PwC, 2019). Although the recovery picked up strongly in 2016, it has since been lackluster resulting in sluggish economic growth. With the economy of Nigeria being highly dependent on oil as the main source of forex earnings and revenues for the government. As such, its main concern is global oil demand and fluctuating oil prices. Nigeria is ranked 49th in world export  and India, the United States, and Spain are its top export destinations. Crude petroleum is the top export product, accounting for $35.6 billion of $46.8 billion total exports (OEC, 2017). Petroleum gas is the second-best export product, accounting for $6.47 billion, followed by refined petroleum, which accounts for $774 million of total exports. For imports, China is Nigeria’s top origin, supplying $9.6 billion worth of imports. Other major importing countries  include Luxembourg, the Netherlands, South Korea, and the US. Refined petroleum is the top and largest import. Other major imports include passenger and cargo ships, wheat, cars, and raw sugar. Nigeria imports a total of $34.2 billion, creating a $12.7 billion positive trade balance (OEC, 2017). 

Following the global financial crisis of 2008-2009, the banking sector in Nigeria focused on regulation and recapitalization, resulting in the growth of other sectors, including services, telecommunications, and agriculture. The three key sectors in Nigeria’s economy are services accounting for 56.4%, industry 22.5%, and agriculture 21.1%. Telecommunications is one of Nigeria’s key services. Agricultural commodities  include cocoa, rubber, corn, cassava, and cotton; industry products include crude oil, chemicals, fertilizer, coal, tin, steel, cement, and rubber products (CIA, 2019). 

Nigeria’s reluctance to execute policy reforms and election uncertainty negatively impacted the inflow of foreign direct investment (FDI) and foreign portfolio investment (FPI). From 2017, the foreign investment and FDI have been on a decline. For instance, in 2018, FDI fell by 36% from $3.5 billion to $2.2 billion (PwC, 2019). As policy rates get tightened by advanced economies, the interest rate differentials are on the decline. The investment climate is also becoming unfavorable because of the upcoming 2019 election, which may exacerbate current political instability. There is also instability in the broader macroeconomy (PwC, 2019).   

The economic growth observed in Nigeria did not lower poverty levels. Of the 180 million people, 62% still live in extreme poverty. Much of the poverty in Nigeria is a result of pervasive corruption, an ineffective judicial system, restrictive trade policies, slow legislative reform processes, a lack of infrastructure, insecurity, and an inadequate supply of power. The average annual income per adult in Nigeria was $11,363 in 2018. The wealthiest 20% of Nigerian citizens hold 49% of the nation’s overall income, while the lowest 20% hold only 5.4% of the nation’s income (Index Mundi, 2017). On the poverty, the poverty gap at $5.5 a day (2011 PPP) is 59.6%. The poverty gap at national poverty lines is 17% with that of the rural being 20.1% and that of the urban being 11.6%. As of 2017, a total of 34.10% of the population was self-employed and the employment-to-population ratio of Nigerians aged between 15 and 24 was 34.6% (Index Mundi, 2017). Generally, Nigeria still lags in crucial areas that are reflective of economic health, like education and skills, housing, access to quality health care, and income. As the country tackles these challenges, the net household financial wealth is set to improve.

There are four emerging risks that may have short-to-medium-term effects on the Nigerian economy. One of the risks is lower oil prices from members of OPEC who fail to comply with pricing agreements. This risk has a high likelihood of occurrence and could have a major impact. The other risk is high inflation due to election spending and power tariff and petrol price adjustments. This short-to-medium-term risk is highly likely to occur and may have a significant impact (PwC, 2019). The third risk is monetary policy normalization. With the US carrying out monetary policy normalization, it is likely that Nigeria will experience foreign capital reversal and restriction of further flow. There is a medium likelihood of occurrence within short-to-medium length of impact. The fourth risk is a slowdown in key partner economies. With strong trade ties to the US, China, India, and the UK, a slowdown in those economies could have an impact on Nigeria’s economy. There is a medium likelihood of occurrence and the potential impact is also medium. These four emerging risks threaten the sociopolitical stability, macro-economic growth, economic recovery, and policy continuity in Nigeria (PwC, 2019). 

 

Nigeria’s economic recovery is dependent on the stability of its political environment. The presidential incumbent’s recent return to power means that there would be no change in economic policy and so  the economy will continue to grow at the same pace. If a new government were to emerge, in the future, economic policies would likely change and possibly focus more on economic recovery. This could result in a rise in oil production from the 1.7 to 1.9 million barrels per day. Aside from the uncertainties created by the political environment, Nigeria is Africa’s largest economy and with recapitalization efforts, the economy is relatively stable. In addition, the ongoing US-China trade war could be beneficial to Nigeria, which enjoys good trade ties with the United States (Altenburg, 2019), and help raise its position as a trade partner.

Dear Dr. John Bennett,

It was a pleasure speaking with you on September 3, 2019 to discuss your goals for exporting Negative Pressure Wound Therapy (NPWT) devices into Nigeria. You will see below an outline of the history of Devon International Group (no need to recap history he would know) All company info should be for Devon MD as the company, not Devon International, the umbreall company Devon MD is under) and our strategy for expanding NPWT device distribution into the Nigerian healthcare system.

Background

In our first meeting, our team gained a better understanding of your company’s operations and product, for the purpose of determining the best strategy for fulfilling your business expectations and goals abroad. You identified Nigeria as a target market because it has a rapidly growing population base and economy. To enter into this market, we must create a distribution channel in the country which is cohesive with Nigeria’s current healthcare distribution channel to appeal to as many consumers as possible.

Our initial meeting has given the team an understanding of how your product operates and how the company distributes and prices to its current markets. Devon International GroupMD has created medical devices that help heal wounds and prevent debilitating amputation, using negative pressure; the average wound healing period is two months. The company’s goal is to decrease the effects of small vessel disease, resulting from diabetes, by simulating normal blood flow around a wound. The device applies negative pressure (by “sucking” through a tube) to stimulate blood flow in the wound area to allow healing to begin. It also sucks out infected liquid/puss in the wound; the bacteria in the area prevents the wound from healing, and often exacerbates its condition. Devon MDInternational Group is based in King of Prussia, PA and is currently distributing in X,Y, Z (state if you know them or say “numerous”countries,numerous countries with efforts to expand into Nigeria and Russia.

Based on the discussion, our team will first investigate the economic and medical environment in Nigeria to determine how to position this product in the company, largely based on demand and distribution capability. By surveying the macroenvironment in Nigeria, we will understand which elements of the country’s microenvironment to further explore and understand, and which national needs to address. Then, we will create an in-depth country analysis into those microelements to develop and cement our market entry strategy. This analysis will address governmental and legislative implications on future sales, and other factors that affect and inform our market entry strategy. In our meeting, you discussed previous sales on a business-to-consumer basis, but those were specific cases, so we will explore business-to-business distribution, to discover which method is more conducive to growth.

Please see the following outline for our team’s strategy for Devon International GroupMD’s market entry into Nigeria.

 

Research Strategy:

We will begin with extensive research into Nigeria’s healthcare system, and the general health statuses of its population. This will help us determine where the need is in Nigeria, and how we can shape our strategy to address that need. Moreover, researching the legal and regulatory environment of the country will help us avoid costly obstacles when obtaining permits or begin importing products. We will also reach out to Devon International Group’sMD’s current distributor in Kenya to get an understanding of the supply and sales chain in that country from a direct source, with the intent of taking much of the Kenyan strategy and applying it to the Nigerian market. 

 

Industry Research:

We will analyze the current state of the health care distribution system in Nigeria, paying special attention to political and regulatory factors, and any challenges or opportunities those systems present. Despite rapid population and economic growth, the Nigerian healthcare system seems to drag, and we need to evaluate the causes for this, and find any possible solutions applicable to Devon MD. We will also look to similar countries, economically, and evaluate strategies that have been successful to inform our approach. Finally, we will examine the dynamic between healthcare providers and consumers, including the effect of prices, to determine the best method for getting Devon MD products to the appropriate consumer group.

 

Market Research:

The largest market for Negative Pressure Wound Therapy (NPWT) devices is in diabetics with small vessel disease, which is a direct result of diabetes. This disease prevents the body from healing properly, particularly in the feet and legs, threatening total debilitation for those afflicted. Diabetes is a growing concern worldwide, particularly in growing economies, as access to food and luxuries increases. Approximately 2%, or 1.7 million, of Nigerian adults are afflicted with diabetes, making this a prevalent concern. Researching to understand the market for these devices, not just for diabetes, but other afflictions will help us determine where the need lies in Nigeria. While this is a good brief intro to the Nigerian market, state more on what areas or segments you intend to research in the market.We will also research the most effective distribution methods for those who may benefit from this device. We will research where the biggest opportunity lies, urban or rural areas, and begin to segment those markets to create the most effective entry strategy.

 

Other Regulations

Nigeria requires that all medical devices register new medical devices for approval before entering the market; this entails submitting:

1.     Application form

2.     CFS

3.     Quality system certification

4.     Declaration of conformity

5.     Description of device and intended use

6.     Clinical and preclinical data

Medical devices are organized into four levels according to risk level: A – Low; B – Low-Moderate; C - High-Moderate; D – High.

Again,  while this is a good brief intro to the Nigerian market, state more on other areas or reguslations the team intends to research in the market.We will also research production regulations and specifications to determine any obstacles Devon MD may experience when transferring an existing product into a new market. It is very likely that Nigeria will have very different materials production regulation, and we will explore those and incorporate them into our strategy to begin making necessary changes in the early stages of market entry. We will also explore any differences in medical laws and regulations which can inhibit the sale or use of the NPWT devices. Very basic research helped us determine that Nigeria is currently experiencing a “Brain Drain” of medical professionals, so we will determine that there are enough medical professionals to aid in the distribution and use of this product. Additionally, we will identify any miscellaneous regulations that may affect the use of this device including, but not limited to, electrical, waste disposal, and environmental regulations.

 

 

Engagement

The International Business Student Research Team will:

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Evaluate the market potential for entry into Nigeria by:

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Considering the regulatory and political environment of medical device sales and

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Analyzing the size and depth of consumer demand for this kind of medical device;

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Analyze and determine the best sales strategy for market entry by:

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Evaluating the opportunities of business-to-business distribution and

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Evaluating the opportunities of direct-to-consumer distribution;

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Recommend a market entry strategy that capitalizes on Devon International GroupMD’s differentiation and provides significant opportunity for growth; and

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Respect the strict confidentiality of the company information that they obtain in person or in writing and of the research data that they will find.

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Client will:

●      Provide specific information about their goals, and the product’s features and advantages.

●      Participate in at least two (2) meetings/conference calls throughout the duration of the project to discuss progress and updates.

●      Respond promptly (within 24 hours) to team requests for information and feedback on findings.

●      Encourage the team keeping in mind that this is an academic engagement with the purpose of learning without any compensation.

●      Provide the team with feedback and suggestions on further direction of research, as needed.

●      Assume all the risks associated with any error and/or omission that the students may have unintentionally made.

 

 

 

Conclusion

Our team would like to thank you for joining us to discuss the potential opportunities for your company’s market entry into Nigeria. If you have any questions or concerns, please do not hesitate to contact us