New product development is the process of conceptualizing, creating and marketing new products that solve customer problems or meet market demand.
With Nigeria’s large and youthful consumer market, there are major opportunities for companies to innovate and introduce new products tailored to local tastes and preferences.
However, developing successful new products requires extensive research, planning and testing before launch.
This article provides an overview of the key steps Nigerian companies should follow during new product development to maximize chances of success.
How to Conduct Market Research for New Product Development in Nigeria
Understand the Market
Before conceptualizing any new product, it is crucial to deeply understand the target market in Nigeria.
Key aspects to research include:
- Consumer needs – What problems do consumers have that are not adequately solved by existing products? What do they wish was better or different about current offerings? This can be uncovered through surveys, interviews, consumer panels and focus groups.
- Purchasing criteria – What factors do consumers consider most when deciding whether to purchase products in this category? These may include price, quality, brand reputation, features etc.
- Competitor offerings – What competitive products are currently available? How do their features, quality and pricing compare? Where do they fall short in meeting consumer expectations?
- Industry and technological trends – How are products in this industry evolving globally and locally? Are there innovations that can be adapted to the Nigerian context to delight consumers?
Analysis should seek to uncover gaps, frustrations, and unmet needs that a new product could uniquely fulfill for Nigerian consumers.
Craft a Compelling Value Proposition
A value proposition is an important concept that should guide any new product development targeted at Nigerian consumers.
It encapsulates the unique value and benefit that a new product will offer, that strongly resonates with consumer needs and gives it an advantage over competitive offerings.
What is a Value Proposition?
A value proposition is essentially a business’ promise to consumers.
It states clearly how the new product will solve customer problems better than alternatives – and why they should buy it.
More specifically, a strong value proposition has three key attributes:
- Consumer centric – Focuses on product benefits that closely match what the target consumer values
- Distinctive – Articulates unique advantages not found with competitor products
- Credible – Supported by evidence, stats and testimonials that back up claims
Elements of an Effective Value Proposition
Creating a compelling value proposition involves getting four key elements right:
| Element | Description |
|---|---|
| Defining the target customer | Get very specific about the ideal consumer profile for the product – age, location, behaviors etc. |
| Underlying consumer need | Pinpoint the essential need state or problem the target consumer has that the product solves |
| Product’s advantage | State the specific way the product solves the consumer problem that makes it demonstrably better than alternatives |
| Consumer benefit | Describe the end benefit the consumer gets from the product solving their need. Should be an aspirational end-state that emotionally resonates |
Here is an example value proposition statement that weaves together all four elements:
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Guidelines for Crafting a Value Proposition
Follow these key guidelines when designing a value proposition for any new consumer product:
- Keep it simple – Distill into one compelling sentence that conveys the core essence of value
- Lead with the key consumer benefit – How the product improves their life is most important
- Support claims with proof – Credible evidence like stats increases believability
- Test message resonance – Get product prototypes and value proposition in front of real target consumers for feedback
- Adapt messaging – Refine based on feedback to ensure messaging strikes an emotional chord
Research Inputs for Value Proposition Design
To craft an insight-driven value proposition, extensive research is vital:
Consumer research questions
- What are 3 biggest frustrations with currently available products?
- What specific improvements do you wish for the most?
- How would fixing this frustration change your life?
Competitor analysis questions
- Where are competitive products falling critically short?
- What negative feedback are users highlighting the most?
- What innovations can we introduce that competitors lack?
Aligning the Full Business to Value Proposition
Beyond marketing, the value proposition should guide everything:
- Product design specifications – Deliver tangible functionality to unequivocally deliver on promises
- Pricing metrics – Reinforce value billing the offering as superior to competitors
- Partner ecosystem – Enable delivering complete end-to-end value
- Measuring success – Track consumer sentiment KPIs beyond just sales
With alignment across the business, products that nail value proposition stand apart. This builds authenticity for the brand over time as well.
Remember, obsessing over value proposition design is perhaps the most crucial step in increasing odds of success for any new product targeting Nigerian consumers.
The effort to distill what consumers truly value and conveying superior value over competitors pays remarkable dividends.
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Translating Value Proposition into Winning Product Design
With a compelling value proposition as North Star, the next phase in new product development is designing the actual product offering.
This includes translating business promises to consumers into tangible product specifications, prototypes and user testing to refine designs to perfectly match market needs.
Here are key steps for product design:
Set Preliminary Specifications
Aligning features to the value proposition involves:
- Materials used
- Production quality thresholds
- Size/portability considerations
- Core functionality promised
- Supplementary features
- Compliance standards
- After-sales support
These set guardrails for design choices and communicate required functionality to product teams.
Develop Prototypes
With specifications framed, companies should invest in professional-grade prototypes – either in-house or via outsourced partners.
Prototyping achieves three crucial objectives:
- Shows product vision – Makes the idea tangible for internal and consumer feedback
- Enables testing – Key interactions, features and messaging can be validated
- Supports iterations – Accelerates making refinements pre-launch
Best practices for prototype development:
- Focus prototypes on critical features that bring the value proposition to life
- Create multiple options for testing different configurations, pricing
- Add representative branding, packaging for look and feel validation
- Use cost-effective materials while keeping true-to-life functionality
Conduct User Testing
The ultimate test of effective product design is when prototypes are actually tested with target consumers.
Focus groups, lab studies, and in-context tests should ask:
- Does product stand out from current solutions?
- Are consumers able to quickly grasp its benefits?
- What delights and concerns do they have about the concept?
- How can messaging or features be tweaked to better meet needs?
Analysis should capture both quantitative support on adoption intent and qualitative quotes on what resonates or what should improve.
Based on feedback, companies can refine prototypes before finalizing specifications for manufacturing partners.
Finalize Design Parameters
After exhaustive testing, the commercial product design gets finalized by locked down:
- Approved visual designs & product specifications
- Sourcing and integration of certified vendors for component supplies
- Alignment with manufacturers/assemblers on process quality
- Setting distribution-ready packaging and portion sizes
This phase bridges design specifications with manufacturing systems. Cross-functional collaboration is key.
At the end of the process, products should unequivocally deliver against the promise in the value proposition that consumers validated.
Short-changing product experience risks reputational damage even if marketing keeps overpromising.
Ownership for Continuous Improvements
In line with modern agile principles, product design responsibility does not end at launch.
To sustain advantage as market preferences evolve, product teams should plan:
Quarterly design reviews
- Review market performance, consumer feedback
- Address gaps through feature enhancements
- Incorporate innovations from global tech trends
Annual prototype validations
- Develop next-gen prototypes drawing from latest consumer research
- Test relevance of all existing features along with new concepts
This sustains relevance over long product life cycles even as underlying technologies shift.
In summary, meticulous product design fueled by continuous prototype testing and consumer feedback results in delightful solutions tailored specifically to Nigerian consumers.
The upfront effort of designing contextual products drives exponential returns for companies over the long term.
Rigorous Financial Analysis Sets New Products Up for Success
While an exciting new product concept and prototype may achieve technology feasibility and customer validation, prudent financial analysis is equally crucial before proceeding to launch.
Specifically evaluating production costs, anticipated demand and pricing power allows setting realistic expectations on viability and growth trajectory.
Here are key aspects for financial analysis:
Project Demand Rationally
- Consumer research – Quantify target addressable consumer base who need the product and would find value proposition appealing
- Use comparable benchmarks – Analysis adoption rates for similar products to estimate likely penetration
- Factor in seasonality – How monthly/ quarterly demand might fluctuate in the category?
- Right-size initial forecasts – Accounting for trial conversions and repurchase lift over 2-3 years
Conducting this market sizing analysis steers investments and growth strategies.
Benchmark Competitor Pricing
- Product variants comparison – How features map to own product grades being launched?
- Pricing across channels – Online vs offline price variances to consider
- Geographic differences – Variations across regions?
- Discounts and promotions – Typical percentages offered?
This competitor analysis allows aligning pricing with customer value perception while maximizing margins.
Detailed Production Cost Evaluation
- COGS breakdown – Raw materials, assembling charges and unit costs at product grades planned
- Inventory buffer – Stocking requirements to manage demand changes/ uncertainties
- Certification expenses – Product safety, quality standards compliance
- Cost reduction roadmap – Renegotiating with vendors as scales pick up
Fine-tuning cost elements and assumptions affects profitability projections.
Set Realistic Revenue Expectations
The demand and pricing analysis gets translated into practical revenue projections by:
- Defining sales phases – Realistic timelines to hit critical mass across regions
- Calculating distro margins – To arrive at net realizations
- Linking production costs – Variable costs impact GM per product variant
- Factoring discounts – Introductory, channel specific offers to drive trials
Revenue projections require meticulous piecing together of multiple cost and market factors.
Make Investments Explicit
- Asset investments – Machines, tools for manufacturing facilities
- Operating costs – Talent, administrative overheads
- Working capital – Inventory, receivables financing
- Marketing budgets – Launch campaigns, sampling etc.
- Capex phasing – Aligning spend to demand trajectory
This positions upfront and ongoing investment requirements.
Financial Analysis Checklist
| Metric | Methodology | Assumptions |
|---|---|---|
| Target consumer cohort size | Consumer profiling and market sizing | |
| Demand forecast | Historical analog analysis | |
| Product pricing | Competitor benchmarking | Discount percentages, channel costs |
| Variable costs | Production analysis | Scale benefits over time |
| Revenue projections | Bridging demand, pricing, costs | |
| Profitability analysis | GM, operating costs for sensitivity | |
| Investments required | Capex, opex and working capital |
Diligencing these financial aspects sets the stage for securing investor backing by framing growth expectations accurately.
Downstream, it helps companies track performance relative to the assumptions made.
In summary, prudent financial analysis is key for designing new products sustainably.
It also forces assumptions about adoption and costs to be pressure tested early, helping teams anticipate challenges even before launch. Done well, it unlocks funding by quantifying the commercial promise as well.
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Launching and Monitoring
Meticulous launch plans are crucial for new products in Nigeria:
- Market testing – Pilot sales in a small region to refine messaging, pricing etc. before nationwide launch
- Inventory management – Match production planning, logistics with phased launch activities
- Marketing blitz – Splashy PR campaigns, social media engagement, influencer seeding to drive awareness pre and post launch
- Distribution – Ensure retail availability in channels where target consumers prefer to shop
- Ongoing tracking – Continuous monitoring of sales trends, reviews, net promoter scores to spot issues
- Optimization – Rapid incorporation of feedback into tweaks of messaging, features, pricing etc. to bootstrap product-market fit
Agile tracking and optimizations after launch can multiply likelihood of success for any new product in the first few months.
Key Takeaways
- Solve a consumer problem better than competitors – Success requires a compelling value proposition
- Design products specifically for local consumers – Through constant protoyping and market feedback
- Conduct rigorous business analysis – To secure investment and set expectations
- Plan meticulous launch strategies – Getting all go-to-market elements right is crucial
- Track and optimize vigorously post-launch – To keep improving product-market fit
Following these strategic steps can set up any new product for sustainable traction.