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  Like many other African countries, Nigeria is filled with many underserved markets. This spells opportunities for investors and entrepreneurs. However, many investors and founders have launched their businesses and startups in Nigeria without first doing thorough due diligence, leading to horrible ends. Some of these founders base their findings on doing business in an emerging market, unproven online beer-parlour sources and other armchair research.
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There are many stories of founders who were sure about launching their startups in an emerging market like Nigeria with the hope and assurance that underserved markets would acquire their products and services, only for them to fail woefully and pack up. Therefore, aspiring investors and prospective and current founders must understand emerging markets, especially Nigeria, to tailor their operations and strategies to meet the demands of underserved communities. In this article, I offer invaluable insights into understanding the emerging market called Nigeria.
  • The Underserved Market Is Highly Regulated

Unlike what is obtainable in other climes like the US, EU and Canada, underserved markets are highly regulated. The Nigerian market is regulators-driven and always experiences the involvement of the national government and informal gatekeepers like market unions, ethnic and religious associations, industry unions, social media referrals, cultural associations and so on. The effects of this regulation are the practice of the iron rule of oligarchy, where few brands dominate the market due to affiliations.
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On the other hand, the national government regulates the price. According to a study on emerging markets like Nigeria, 80% of customers made purchase decisions based on word-of-mouth referrals. Therefore, informal gatekeepers are very influential in emerging markets like Nigeria.
  • Underserved Markets Are Fragmented

Another interesting insight founders must learn about emerging markets is that they are primarily fragmented in nature. What does this imply? In a culturally, ethnically and religiously diverse nation like Nigeria, customers are bound to differ in their tastes and approach. One of the biggest errors a business founder can commit is approaching the Nigerian market with a sense of uniformity. Accordingly, a business professor at the Lagos Business School, Uchenna Uzo, aptly puts it:
“Underserved doesn’t necessarily mean undiscerning. Customers in underserved markets have varying product and market knowledge, buying power, brand awareness and price sensitivity.” 
  • Purchase Channels Are Unconventional

Business founders must recognise the fact that emerging markets are unstructured and unconventional. The dominant channels where you can reach most customers in an underserved market like Nigeria are found in the informal sector.
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To reach more customers your main distribution channels will include media influencers, gatekeepers, brand endorsements, and specialists to reach more customers. These channels play a vital role in the success of your brand.
  • Aspirational Values Influence Buyers

The Nigerian market is filled with customers who are soaked in one aspirational value or the other. Their choices are governed by certain religious, ethnic, family and ethical values. For example, the Hero beer brand was successful in southeastern Nigeria because it evoked historical and cultural bias among the Igbo people. Also, this can hurt brands. For example, many businesses would rather see God as their insurance rather than patronise insurance companies to insure their business. Hence, it can affect insurance companies negatively. Featured Image Source: Inc.Magazine
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This article was first published on 14th October 2022

nnaemeka-emmanuel

Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.


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