Read the following case study

THE MARKETING ENVIRONMENT OF CONSUMER PRODUCTS 

Household spending by all Kenyan households amounted to over Kshs. 500 billion in 2007, or 63% of gross domestic product. This level of expenditure is very closely related to conditions in the country's macro-economic environment. For marketers, it is crucial to be able to read the macroeconomic environment and to predict the effects of change in demand for their goods and services. Identifying turning points in the economic cycle has become a work of art as well as science, as consumers frequently confound experts by changing their expenditure levels in a way which could not have been predicted on the basis of past experience.

During the first quarter of 2008, mortgage rates in the Kenyan market were falling; unemployment was close to its lowest level for two decades; pay rises were keeping ahead of inflation; and share prices were recovering from their recent falls. Yet expenditure by both urban and rural households was falling sharply. For three consecutive months retail sales fell in value, with retailers reporting below expected levels of sales. Retailers have traditionally found excuses to justify poor sales to their shareholders, including weather which is too cold/too hot.

Throughout 2008, prices of consumer goods fell significantly, with consumer goods down in price by an average of 2% in a year and clothing by 5%. Economic theory would have suggested that lower prices would have resulted in higher sales, especially considering the other favourable elements of the macro-environment. However, this did not appear to be happening. 

What else could have been happening in the marketing environment to explain falling household expenditure? At the time, the media was full of reports of an impending global economic crisis, triggered by difficulties in the economies. Consumer confidence is crucial to many high value household purchases such as houses and cars, with consumers reluctant to commit themselves to regular monthly repayments when their source of income is insecure 

Even this may be only a partial solution, as a survey of consumer confidence carried out in October 2008 by Finnet Research on behalf of the Private Sector Alliance showed that although consumers were pessimistic about the state of the national economy, they were quite upbeat about their personal financial situation. One possibility was that consumers had become cannier. If prices are falling, why not wait longer until prices have fallen further? Consumers had also witnessed the effects of previous over-borrowing and had been more cautious during the recent period of economic growth, resulting in a historically low level of personal sector indebtedness. For companies who need to commit resources a long while in advance in order to meet consumers’ needs, an accurate understanding of the market environment is crucial if stock surpluses and shortages are to be avoided. But this case shows that getting it right can still be very difficult.

And answer the following question 

1. Identify all of the environmental factors that can affect the demand for consumer products in the Kenyan Market 
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3. In the Kenyan context as shown in the case study asses the ways and the level to which the marketing environment can affect Marketing performance
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5. In what ways can a manufacturer of consumer durables seek to gain a better understanding of its marketing environment?
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7. How can a manufacturer of consumer goods seek to respond to environmental change as rapidly as possible in the Kenyan marketing environment?
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