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Foreign Market Entry of Electronic Food Delivery Service in Nigeria

Executive Summary

This report outlines the marketing mix strategy for an online-based food delivery service in Nigeria. Similar products have gained extreme popularity in developed countries, and this tendency was further supported by the COVID-19 restrictions. Under these circumstances, the public has grown to acknowledge the unquestionable benefits and convenience of the format. It is suggested that a similar business model can be adapted to Nigeria. This market demonstrates considerable progress in terms of digitalization while remaining highly underdeveloped as compared to its potential. Moreover, researchers argue that the implementation of the best global practices positively contributes to the economic and social growth of developing countries. The PESTEL analysis of the target environment is provided within the report, determining the primary areas of concern. More specifically, socioeconomic disparities, increased cultural diversity, and sustainability problems have become the key pressing issues for Nigeria, and the marketing mix is to be adapted in light of them. Ultimately, the proposed marketing mix emphasizes the benefits of the product based on two core audiences who are likely to appraise it: young adults and middle-aged consumers.

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Introduction

In the globalized environment of the 21st century, it has become possible to seek new business opportunities based on prominent examples from other areas of the world. Furthermore, the rapid development of communication, technology, and logistics provides excellent prospects in terms of expanding successful business models to new locations. In fact, the current era is unprecedently favorable for global entrepreneurship because of the factors mentioned above (Dev et al., 2007). Such operations enable an array of benefits for both organizations and consumers. From one perspective, successful entrepreneurs enjoy a better variety of markets that allows them to maximize revenues while avoiding the exhaustion of the current market potential (Leonidou and Hultman, 2019). On the other hand, global consumers are provided with a better selection of goods or services that contribute to the overall higher quality of life. In addition, such operations utilize the best practices established in other markets, thus contributing to the customer experience.

New business opportunities and ideas are often enabled by the external environment that modifies the entrepreneurial landscape to a considerable degree. For example, the current situation is largely conditioned by the ongoing novel coronavirus pandemic that prompted major transformations across various industries (Alvarez et al., 2020). Following the outbreak of COVID-19, most of the world’s governments introduced anti-pandemic measures that comprised personal interaction restrictions and full-scale lockdown protocols (Ratten, 2020). Under these circumstances, remote electronic commerce services have seen a major surge in popularity (Amankwah-Amoah et al., 2021). More specifically, online trade and delivery applications have acquired an immense level of popularity. They allow customers to enjoy a variety of food products delivered to their doorstep while maintaining the required social distancing measures. Evidently, the use of such services is not limited to the pandemic, which is why their popularity has persisted even upon lifting lockdown protocols.

The purpose of this report is to discuss and analyze the establishment of an electronic, online-based food delivery service in Nigeria. The research direction is prompted by the observed levels of similar product popularity in Europe, namely the United Kingdom (Suharanto et al., 2018). As discussed by Power et al. (2020), the development of food delivery services has become an effective response to COVID-19 challenges for the industry, including the stockpiling of products and prolonged restaurant closures. The popularity of the service in the U.K. suggests that similar opportunities can be explored overseas, namely in Nigeria. Gbosi (2019) states that developing countries form a solid foundation for the implementation and development of global business practices. These nations represent unexplored markets, creating a favorable environment for the growth of new entrants. Moreover, developing countries and their populations equally experience considerable benefits in the form of a strong economic impact (Brandl et al., 2019). Nigeria being one of the leading African nations, it will become a suitable target for foreign investment.

PESTEL Analysis

In spite of the ongoing globalization of business processes, entry to a new market remains a challenging procedure. A firm’s positioning and marketing strategies can hardly be deemed universal, as each setting presents a range of specific attributes that affect the organization’s image and performance (Gielens and Dekimpe, 2007). A similar perspective is expressed by Griffith and Hoppner (2013), who explore the managerial competencies related to the improvement of a company’s global marketing strategies. They distinguish certain soft skills that facilitate the operations in overseas markets, counteracting the potential impediments. More specifically, a considerable emphasis is laid on the ideas of managers’ flexibility and adaptability in the context of international marketing processes. Such a perspective is valuable in the context of the present research, as it underpins the importance of cultural and geographical adaptation of business models. In other words, tactics that function effectively in one area of the globe may not yield similar results in another region without thoughtful alterations.

In this regard, the PESTEL analysis appears a valuable instrument allowing marketing managers to assess the key features of the envisaged market prior to entering it with a new project. In the context of the proposed entry, a case of market pioneering is represented. According to Varadarajan and Jayachandran (1999), such an approach has the potential to yield a serious competitive advantage for the firm. At the same time, it is largely associated with serious difficulties that consist of introducing a new product to an unfamiliar audience. Moreover, aside from the primary stakeholders, the environmental factors play a role of paramount importance in foreign market pioneering. Business operations are subject to the influence exercised by an array of factors, including, but not limited to, political, economic, and social aspects of life in a certain area (Matovic, 2020). The PESTEL analysis allows for a comprehensive review of the primary attributes that may become either enablers or impediments to market entry (Sigcha et al., 2021). Therefore, the external factors of the Nigerian market for food delivery applications deserve additional exploration.

Political Factors

In spite of the ongoing efforts to promote democratic values and free-market relations, the significance of political factors in business remains considerable. From this perspective, Nigeria is a Federal Republic that utilizes the effective model implemented in the United States of America (“The Statehouse,” 2021). Accordingly, the political landscape of the country aims at replicating the leading democratic paradigm of the West, promoting freedom, human rights, and sustainable development. Nevertheless, the practical implementation of certain principles has not been completed yet, as political issues persist in Nigeria. In the context of business operations, corruption remains one of the most pressing concerns for this country. In order to improve the situation, the Nigerian government actively cooperates with the Secretariat of the Commonwealth, working on anti-corruption task forces (“Nigeria: constitution and politics,” 2021). Within the framework of this cooperation, the authorities introduce new tactics of preventing, targeting, and prosecuting corruption. These efforts demonstrate that the situation is bound to improve in the upcoming years, making it possible to yield a positive evaluation of the political environment of Nigeria with a focus on the short-term future.

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Economic Factors

In the economic context, Nigeria remains on the list of developing countries of West Africa. According to the World Bank (2020), the nation has been particularly subject to the detrimental impact of the COVID-19 pandemic and the crisis instilled by it. Furthermore, over 40 percent of Nigeria’s population remains below the poverty line, and the situation is aggravated further by the ongoing crises. The COVID-19 outbreak and the global decrease in oil prices place 53 million Nigerians in a vulnerable position, which accounts for another 25 percent of the population. In 2015-2016, Nigeria experienced its first recession across one-quarter of a century, but the current crisis appears even more serious (World Bank, 2020). By 2019, the country’s fiscal deficit amounted to 4.4% of the GDP, the distribution of which is presented in Figure 1. Accordingly, the economic environment of the target market requires serious considerations in terms of the pricing model of the future company. With increasing poverty levels in Nigeria, it will be vital to ensure that the new services remain accessible and affordable, as the company risks losing over 60% of the market otherwise.

 Nigeria’s GPD Distribution by Sector 
Figure 1. Nigeria’s GPD Distribution by Sector 

Social Factors

Social factors play a role of pivotal importance in the new market entry process, as they are directly related to stakeholders and their purchasing behavior. From this perspective, Nigerian society is one of the most developed in Africa, as the country pursues the modernization of values. The official language of the country is English, meaning that companies that originate from the U.K. will not experience a linguistic barrier (“Nigeria: constitution and politics,” 2021). At the same time, Nigeria is a multi-ethnic country with a considerable level of social diversity. The major religious communities of the nation are represented by Islam, Christianity, and local indigenous beliefs (“Nigeria: society”, 2021). Despite the ongoing growth of social thought and awareness, Nigeria continues to experience major issues. More specifically, poverty and low literacy rates within the population serve as impediments to the country’s growth. According to Agbalajobi (2021), the Nigerian politics and management sphere demonstrate low women representation rates. Ultimately, Nigeria still remains on the path to improving the representation of equality in major processes.

Technological Factors

In the age of digitalization and rapid progress, the technological capacity of the market gains additional importance. The views of African counties as technologically poor have become completely obsolete. The progressive tendencies have encompassed most of the continent, bringing new technologies to the companies and end consumers across Africa. This tendency becomes particularly evident in the case of Nigeria, as the country demonstrates excellent digitalization rates (Ramachandran et al., 2019). According to Salaudeen and Howell (2021), the advancements in mobile solutions and accessible, fast Internet connections have transformed the continent, in general, and Nigeria, in particular. Today, the country remains the leading media market in West Africa, demonstrating excellent opportunities for tech-based entrepreneurial ideas. Salaudeen and Howell (2021) report a serious increase in the number of advanced digital businesses that both enter and originate in the Nigerian market. Therefore, the technological environment in this country is favorable for the proposed project, as the idea of online app-based solutions is familiar for the target audience.

Environmental Factors

The 21st century has seen an increase in terms of the attention devoted to the preservation of the environment and sustainability. In terms of nature, Nigeria possesses valuable examples of outstanding monuments and areas that attract tourists across Africa. The natural diversity of the country is equally impressive, as it has beaches, plains, and beautiful rainforests. Nevertheless, Nigeria is subject to serious environmental challenges that are to be addressed in the short term (Chike Mba et al., 2017). Deforestation and water depletion are the primary areas of concern for the country, as the issues continue to worsen as time progresses (Olalekan et al., 2019a). Under these circumstances, it is essential for new market entrants to ensure an emphasis on sustainability as a part of the marketing mix (Olalekan et al., 2019b). This way, it will be possible to earn the trust and respect of the most progressive and environmentally aware stakeholders.

Legal Factors

From a legal point of view, the business landscape of Nigeria will not pose any big surprises for the new entrants. The country’s authorities support healthy work relations and positive conditions for employees. These principles are embedded in the Nigerian Labour Act, compliance with which is obligatory for all firms operating on the nation’s soil (Emudainohwo, 2020). As per the country’s legislative framework, the purchase of land and property in Nigeria is possible through a locally registered entity. Thus, the envisaged company will need to take into consideration these factors when planning the market entry strategy.

Segmentation and Targeting

In the context of the new market entry, each organization engages in a profound process of segmentation and targeting in order to develop an understanding of the future audience. Miller (1992) proposes a ten-step roadmap to success in the expansion and entry into international markets. Within the proposed framework, a considerable emphasis is laid on the importance of accurate targeting of the population. In other words, one of the key aspects of the pre-entry analysis comprises the in-depth analysis of the target audience of the product. Dibb and Simkin (1991) express similar opinions, underlining the fact that customer preferences may vary greatly across social segments. Thus, the design of the marketing mix will rely heavily on the image and preferences of the target audience.

One of the primary principles of such segmentation is based on the consumer age. For example, young people are more susceptible to advanced, revolutionary ideas, whereas targeting a more mature population may be challenging if conservatism prevails (Moschis et al., 1997). Online-based food delivery services naturally require a certain level of digital literacy, making younger adults and teenagers the primary target audience for the project in Nigeria. However, the company may find it difficult to sustain the necessary level of revenues unless more affluent segments are targeted. In this regard, middle-aged consumers should also be added to the core of the target audience. However, engaging these demographics is a challenge that will require a diversified approach to the marketing mix. These aspects are to be explored in more detail in the further sections.

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Marketing Mix

As can be inferred from the previous discussion, the marketing mix for the proposed food delivery service in Nigeria is to consider local particularities and demographics. The personalization of experience will be one of the pillars of the envisaged strategy. Möller (2004) refers to this principle as highly effective within the competitive environment of the 21st century. However, there are certain limits to personalization in the discussed industry, which is why the approach to it should be mediated by the necessity to optimize the expenses. Furthermore, Constantinides (2006) argues that in marketing as a discipline, theoretical and practical experiences often diverge. Consequently, it is proposed to concentrate on the initial personalization based on the age differences and preferences of the two core demographics: young adults and middle-aged customers.

Seven P’s of the Marketing Mix

Based on the theoretical research and practical observation, it appears possible to draft the preliminary design of the company’s marketing mix. From a theoretical perspective discussed by Borden (1984), a marketing mix is a certain formula that outlines the marketing strategy. Evidently, the concept remains subject to change, as required by the environmental transformations (Londhe, 2014). In this regard, the contemporary field of marketing relies on the paradigm of 7 P’s that reflect the key features of the product and the campaign in relation to the envisaged strategy (Figure 1). According to Jain (2013), the current marketing mix framework is the product of the natural evolution of the tradition 4 P’s concept. The latter was widely used previously, becoming the cornerstone of the marketing theory (Singh, 2012; Rafiq and Ahmed, 1995). The necessity for the expansion of the mix is justified by the increasing complexity of the business landscape. Table 1 represents the proposed marketing mix for the food delivery service in Nigeria.

The 7 P’s of the Marketing Mix
Figure 1. The 7 P’s of the Marketing Mix

Table 1. The Proposed Marketing Mix for the Food Delivery Service in Nigeria

Young Adults Middle-Aged
Product Convenient mobile application that provides access to food delivery from the nearest restaurants and stores
Price Competitive price ranges that take into account the economic situation in Nigeria. The prices should remain attractive enough to compete with traditional formats of eating.
Promotion Targeted advertisements on social media, influence marketing, website banners Billboards in the streets near busy roads, posters near the most popular restaurants in the area
Place A mobile application and a website with a colorful and intuitively convenient interface design. The layout is to present all dishes and restaurants in a clear, appealing manner.
People Efficient and polite couriers who deliver the food; friendly and professional online consultants; an advanced chat-bot capable of answering typical questions
Process Focus on efficient yet sustainable practices in delivery: couriers who use bicycles and electric vehicles Emphasis on the efficiency and convenience of the process: the customer does not have to leave their house and endure traffic congestion or lines on the way to the eatery
Physical Evidence High-quality branded materials and booklets; reusable packaging; recognizable backpacks and outfits for couriers to increase the representation in the streets.

Service Elements

The correct implementation of the marketing mix elements presented in the section above will contribute to the development of service elements. According to Southern (2000), these aspects are of paramount importance in business as they make a direct contribution to the customer experience and loyalty. All new products in an unfamiliar environment are subject to public doubt. More specifically, Nigerian consumers are not yet accustomed to the convenience of food delivery services, meaning that they will question the business model of the company during the initial stages of its development.

In this regard, the service element of problem-solving will be crucial. Whenever a customer experiences some difficulties, enabled by the lack of digital expertise or the company’s imperfections, it is vital to ensure that the firm possesses assets that can resolve the issue quickly. Such an outcome will be possible through the emphasis on human resources, nurturing capable workers who can understand and solve the problem experienced by consumers. Effective problem-solving is expected to yield good results, enabling positive experiences among the users of the service. As a result, they will be likely to return and refer the product to their acquaintances, thus creating word-of-mouth. At the same time, the implementation of the marketing mix needs to be in line with the envisaged design to maintain its effectiveness and yield positive results (Išoraitė, 2016). Accordingly, certain control mechanisms are to be implemented. More specifically, the presentation of marketing materials in the online form will allow the management to track the way in which the product is presented.

Conclusion

Ultimately, Nigeria presents interesting opportunities for entrepreneurs willing to explore this market. The environmental analysis of the country reveals certain issues, especially on the social and economic levels, but the assessment remains positive. As a matter of fact, considerable progress is observed in Nigeria, making it possible to project further growth of the opportunities in the market. The envisaged entry will require the establishment of a local business entity that will purchase the required equipment and property for the development of the project. However, the preparations can be completed remotely, as enabled by the nature of the area of interest. Since the food delivery service is to be online-based, the initial marketing campaigns and research may be executed prior to the physical launch of the project. This way, the audience will become more familiar with the concept and its benefits, whereas the company will sustain fewer expenditures.

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