1.1 Background to the Study
The development of new products has become a key element in the strategies of many companies (Brown & Eisenhardt, 1995; Clark & Fujimoto, 1991, p. 6; Grant, 1996; Gupta & Wilemon, 1990; Schilling & Hill, 1998). The current emphasis on gaining competitive advantages, swiftly introducing new products, meeting increasingly demanding product requirements, and dealing with shorter product life cycles has intensified the pressure on new product development (Cooper, 1998). While manufacturing has traditionally been a core area of expertise (Hayes & Abernathy, 1980), excelling in product development has emerged as a significant source of competitive advantage.
In today's business landscape, whether in developed or developing countries, the primary focus is on enhancing the growth and sustainability of Small and Medium Enterprises (SMEs). Consequently, SMEs have garnered increased attention from various stakeholders, including Non-Governmental Organizations (NGOs), research institutions, practitioners, and more. Furthermore, SMEs have been recognized as engines of economic growth and development, benefiting not only developing economies but also developed nations. SMEs make substantial contributions to job creation, innovation among young people, increased production, technological advancement, resource utilization, GDP growth, and, most importantly, poverty reduction (Abiodun, 2014; Washington, 2014).
The United Nations Industrial Development Organization (UNIDO) has confirmed that SMEs typically represent about 50% to 70% of the businesses operating in most countries and contribute approximately 50% of the private sector's turnover (UNIDO, 2016). For example, statistics reveal that in Ghana, SMEs account for 85% of total employment and contribute to 70% of GDP. In South Africa, SMEs contribute 62% to employment and 57% to GDP. However, in Nigeria, SMEs represent 98% of total businesses but contribute only 25% to total employment and 47% to annual GDP (SMEDAN & NBS, 2013; NBS & SMEDAN, 2012; Kongolo, 2010; Irura, Onyango, & Kerre, 2011).
In this context, various strategies have been adopted by firms, such as growth strategies (Hussain, Khattak, Rizwan, & Latif, 2013; Weber, Geneste, & Connell, 2015). Previous studies have recognized that growth strategies can boost a firm's sales, market share, and competitive advantage. For instance, strategies like market development and product development can enhance a firm's competitiveness (Propfe, Kreyenberg, Wind, & Schmid, 2013; Person, 2007; Tavakolizadeh, 2014). However, few studies have established the empirical link between growth strategies and a firm's growth, sustainability, and market performance (Hussain et al., 2013; Gmelin & Seuring, 2014; Lamore, Berkowitz, & Farrington, 2013). It's important to note that these studies were conducted in European and Asian nations and primarily focused on service organizations.
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1.2 Statement of the Problem
Developing new products that can positively impact a bank's profits is a challenging and time-consuming endeavor, particularly in developing economies compared to more affluent ones where consumer purchasing power is higher. The challenge becomes even more complex when dealing with illiterate and low-income consumers, as is often the case in Nigeria when introducing a new product.
Managers must navigate the task of not only attracting potential customers but also meeting their needs while achieving the organization's goals. These dual objectives are increasingly hard to accomplish in a competitive industry. Effective marketing strategies are essential to analyze market needs and evaluate the potential of new or existing products to fulfill those needs. The success of a bank in satisfying these needs is also influenced by superior sales performance and the financial health of the organization. The financial viability of an organization can be assessed by examining its profitability index or ratios over time.
Many small and medium-sized businesses in Nigeria face challenges related to their marketing activities due to a lack of sufficient knowledge about the prevailing market conditions and product performance evaluation. Profitability strategies can only be developed and implemented when the marketing manager is well-informed about the current marketing landscape and can to some extent anticipate future changes in the potential and new product market.
1.3 Objectives of the Study
The main objective of the study is to examine the effect of new product planning on the performance of SMEs in Nigeria. Specific objectives of the study are:
- To examine the impact of new product planning on the financial performance of SMEs in Nigeria.
- To investigate the relationship between new product planning and market share of SMEs in Nigeria.
- To assess the influence of new product planning on customer satisfaction among SMEs in Nigeria.
- To determine the role of new product planning in the competitive advantage of SMEs in Nigeria.
- To evaluate the effectiveness of different new product planning practices among SMEs in Nigeria.
1.4 Research Questions
To guide the study and achieve the objectives of the study, the following research questions were formulated:
- What is the impact of new product planning on the financial performance of SMEs in Nigeria?
- What is the relationship between new product planning and market share of SMEs in Nigeria?
- What is the influence of new product planning on customer satisfaction among SMEs in Nigeria?
- What is the role of new product planning in the competitive advantage of SMEs in Nigeria?
- What is the effectiveness of different new product planning practices among SMEs in Nigeria?
1.5 Research Hypothesis
The following research hypothesis was developed and tested for the study:
Ho: There is no statistical significant relationship between new product development and performance of SMEs in Nigeria.
Hi: There is a statistical significant relationship between new product development and performance of SMEs in Nigeria.
1.6 Significance of the Study
The study is important for many reasons. The following are the major stakeholders this paper through its practical and theoretical implications and findings will be of great significance:
Firstly, the paper will benefit major stakeholders and policy makers in the marketing sector. The various analysis, findings and discussions outlined in this paper will serve as a guide in enabling major positive changes in the industry and sub-sectors.
Secondly, the paper is also beneficial to the organizations used for the research. Since first hand data was gotten and analysed from the organization, they stand a chance to benefit directly from the findings of the study in respect to their various organizations. These findings will fast track growth and enable productivity in the organisations used as a case study.
Finally, the paper will serve as a guide to other researchers willing to research further into the subject matter. Through the conclusions, limitations and gaps identified in the subject matter, other student and independent researchers can have a well laid foundation to conduct further studies.
1.7 Scope of the Study
The study is delimited to Kosso Farms Ltd in Eket Local Government Area of Akwa Ibom State. Findings and recommendations from the study reflects the views and opinions of respondents sampled in the area. It may not reflect the entire picture in the population.
1.8 Limitations of the Study
The major limitations of the research study are time, financial constraints and delays from respondents. The researcher had difficulties combining lectures with field work. Financial constraints in form of getting adequate funds and sponsors to print questionnaires, hold Focus group discussions and logistics was recorded. Finally, respondents were a bit reluctant in filling questionnaires and submitting them on time. This delayed the project work a bit.
1.9 Organization of the Study
The study is made up of five (5) Chapters. Chapter one of the study gives a general introduction to the subject matter, background to the problem as well as a detailed problem statement of the research. This chapter also sets the objectives of the paper in motion detailing out the significance and scope of the paper.
Chapter Two of the paper entails the review of related literature with regards to corporate governance and integrated reporting. This chapter outlines the conceptual reviews, theoretical reviews and empirical reviews of the study.
Chapter Three centers on the methodologies applied in the study. A more detailed explanation of the research design, population of the study, sample size and technique, data collection method and analysis is discussed in this chapter.
Chapter Four highlights data analysis and interpretation giving the readers a thorough room for the discussion of the practical and theoretical implications of data analyzed in the study.
Chapter Five outlines the findings, conclusions and recommendations of the study. Based on objectives set out, the researcher concludes the paper by answering all research questions set out in the study.
1.10 Definition of Terms
- New Product Planning: This refers to the strategic process of conceptualizing, designing, and developing new products or services to meet the changing needs of the market. It involves market research, product design, feasibility assessments, and the creation of an effective plan for introducing new products to the market.
- Performance of SMEs: This term pertains to the overall evaluation of the achievements and outcomes of Small and Medium Enterprises in Nigeria. It encompasses various indicators, including financial performance, growth, market share, profitability, and other relevant metrics that gauge the success and effectiveness of these businesses.
- SMEs (Small and Medium Enterprises): These are businesses characterized by their smaller size and limited resources compared to large corporations. In Nigeria, SMEs typically have a defined range of employment and turnover figures, and they play a crucial role in the country's economic development.
- Effect: In the context of this study, "effect" refers to the impact or influence that the process of new product planning has on the performance of SMEs. This could include positive effects, such as increased profitability or market share, or negative effects, such as financial setbacks or reduced competitiveness.
- Nigeria: This term denotes the specific geographic and economic context in which the study is conducted. Nigeria is a country in West Africa with a diverse economy and a significant presence of SMEs, making it a relevant setting for examining the relationship between new product planning and SME performance.
- Planning: In the context of new product planning, "planning" involves the systematic and organized process of strategizing, outlining objectives, allocating resources, and developing a roadmap for introducing new products into the market.
- Market Research: This refers to the systematic gathering and analysis of information related to the target market, including customer preferences, needs, and market trends. Market research is a critical component of new product planning.
- Feasibility Assessment: This involves an evaluation of the practicality and viability of introducing a new product. It includes considerations such as cost analysis, resource availability, and technical feasibility.
- Market Share: Market share is the portion of the total market that a business or product captures. It is often used as a performance indicator and can be influenced by the success of new product planning.
- Profitability: Profitability indicates the ability of a business to generate profits from its operations. It is a fundamental measure of performance for SMEs, and new product planning can impact profitability positively if executed effectively.