UNIVERSITY OF THE COMMONWEALTH CARIBBEAN

DEPARTMENT OF BUSINESS ADMINISTRATION

END OF SEMESTER ASSESSMENT/2022 (ONLINE)

FALL SPRING SUMMER
For Marker’s use only
Question # Marks
1 (CLO 5)
2 (CLOs 2, 5)
3 (CLO 4)
4 (CLOs 3, 4)
Total (70)
Total (40%)

CENTRE : ONLINE

MODULE : MKT201 PRINCIPLES OF MARKETING

DATE : AUGUST 15, 2022

TIME : 1:00 PM

DURATION : 2 HOURS [ Plus 30 minutes for upload]

STUDENT ID #:

INSTRUCTIONS:

• Please read all instructions carefully before attempting any question.

• This paper consists of FOUR (4) questions.
• PLEASE DOWNLOAD AND SAVE THIS FILE WITH YOUR ID NUMBER. COMPLETE
YOUR ANSWERS IN THE SAVED DOCUMENT. Diagrams, charts, illustrations and tables
where applicable, can be drawn in pencil, a high resolution photo taken and imported into the
document.
 • Quantitative computations may be done by inserting a table or using Microsoft Excel and then
importing into the document.
• PLEASE ANSWER ALL QUESTIONS.
• This paper represents 40% of your total grade.
• Total Marks on this paper is [70].
• Please ensure that you number your questions correctly.
• Write clearly the number of the question being answered on each of the additional pages.
• Where questions have multiple parts, all parts must be answered.
• PLEASE UPLOAD THE COMPLETED MICROSOFT WORD DOCUMENT ONLY, AT THE END
OF THE ASSESSMENT PERIOD.
Write your REGISTRATION NUMBER clearly on each page of your attachments.

ACADEMIC INTEGRITY

You will be charged with plagiarism if you:

• Copy from published sources, including the internet.

• Purchase a pre-written paper (either by mail or electronically).

• Let someone else write this paper for you.

• Reproduce someone else’s assessment paper.

• Submit as your own, someone else’s unpublished work, either with or

without permission.

Consequences of Plagiarism

• If the final work you submit—all of it—is not yours, it does not matter how you
came by it. Charges of plagiarism are brought to the attention of Academic
Affairs, which initiates an investigation that may lead to formal charges.

• The process for the investigation and adjudication of charges may be accessed
at the Dean of Undergraduate Studies Office.

• Plagiarism is a serious offense that can result in a variety of sanctions (for

example, failure of the course in which the plagiarism occurred and suspension
from UCC among them).
THERE SHOULD BE NO COLLABORATION AMONG STUDENTS ABOUT THIS
ASSESSMENT.

EVIDENCE OF COLLABORATION (INCLUDING SHARED TEMPLATES) WILL

RESULT IN A SCORE OF ZERO FOR THE ASSESSMENT.

SECTION A (20 MARKS)

(Spend no more than 30 minutes on this Section)

PLEASE READ THE CASE SCENARIO AND ANSWER THE QUESTIONS

LEGO products are in 130 countries—but the company is always looking to expand its
operations. When LEGO set its sights on China, it entered the market by putting money into
opening LEGO stores in major cities, as well as cities that showed demand and interest for their
products.

LEGO also studied the new market, not seeing a need to create any Asian-specific product lines
as Chinese consumers already strongly valued the traditional LEGO creative play experience.
On the other hand, they also acknowledged the advanced digitization in Chinese play. that would
require them to continue creating their own digital LEGO products.

This focused strategy paid off, as LEGO saw a 4% increase in profits and sales in 2018.
As China continues to develop a very affluent middle-class numbering in the millions within the
coming years, it represents a significant opportunity for LEGO and its market position.

###
QUESTION 1 [CLO 5]

Discuss the different modes of entry a firm can use to enter the international market.
Identify the mode of entry used by LEGO to enter China and the benefits and risks of the mode
of entry chosen. (12 marks)

Joint ventures involve creating a new company with a foreign partner. This mode of entry
allows the firm to share the investment and risks with the partner while gaining access to the
partner's knowledge of the local market. However, the firm may have limited control over the
joint venture's management and operations.

Exporting describes selling products in a foreign market that was produced locally by a country.
And there are two categories of exportation. Indirect – which describes export through a
broker/agency/external intermediary. And Direct describes a company absorbing all the risks and
costs of exporting goods themselves.

Licensing involves granting the right to use intellectual property such as patents, trademarks, or
copyrights to a foreign company in exchange for a fee or royalty payment. This mode of entry
provides the firm with greater control over its intellectual property, but it also has limited control
over the production and marketing of the products.

Direct Investment involves establishing a new company in a foreign market, where the firm has
full control over the management and operations. This mode of entry requires the highest level of
investment and carries the most significant risk, but it also provides the greatest level of control
over the company's operations.

Contract manufacturing – when a firm contracts a company in a foreign market to produce its
goods or provide services
In the case of LEGO entering China, the mode of entry used was direct investment through
opening LEGO stores in major cities and cities that showed demand and interest for their
products. This can be categorized as a form of foreign direct investment (FDI), where LEGO
established a physical presence in the Chinese market by investing in and owning their own retail
stores.

Benefits of direct investment for LEGO in China:

Market control: By establishing their own retail stores, LEGO had full control over their
operations, branding, and customer experience, allowing them to implement their strategies and
adapt to local market conditions.

Brand positioning: Opening LEGO stores in major cities and cities with demand and interest for
their products helped LEGO establish a strong brand presence in China, positioning themselves
as a premium toy brand for the growing affluent middle-class consumers.

Adaptation to local demand: LEGO's study of the Chinese market and their decision not to
create Asian-specific product lines but rather focus on the traditional LEGO creative play
experience showed their ability to understand and adapt to local consumer preferences.

Risks of direct investment for LEGO in China:

Political and regulatory risks: Operating in a foreign market like China involves dealing with
political and regulatory challenges, such as changes in government policies, trade barriers, and
legal requirements, which can impact LEGO's operations and profitability.

Cultural and language barriers: Operating in a market with a different culture and language
can pose challenges in communication, understanding consumer preferences, and adapting to
local norms, which may require additional resources and efforts from LEGO.

Competition and market uncertainties: China's market is highly competitive, and LEGO faces
competition from both local and international toy brands. Moreover, market uncertainties such as
changing consumer preferences, economic conditions, and market trends can impact LEGO's
sales and profits.
In conclusion, LEGO's mode of entry into China through direct investment by opening its own
retail stores allowed them to establish a strong market position, adapt to local demand, and have
full control over its operations. However, it also posed risks related to political and regulatory
challenges, cultural and language barriers, and competition in the Chinese market. Despite the
risks, LEGO's focused strategy and understanding of the Chinese market paid off with increased
profits and sales, leveraging the opportunity presented by China's growing affluent middle-class
consumers.

QUESTION 2 [CLOs 2, 5]

Discuss an important environmental factor highlighted in the case, which supports LEGO’s
marketing strategy in China. (8 marks)

Technological & Economic

Notable environmental factors that have been highlighted in the case would be technological and
economic. With Chinese advances in digitization and technology, LEGO would have predicted
that they would require to create digital LEGO products. And so they did, this prediction would
have been fruitful as LEGO would have seen a 4% increase in their profit and sales in the year
2018. Not only that, but China has seen an increase in the middle-class household which would
have meant that the Chinese would have possessed more disposable income which would have
made LEGO’s segmentation, targeting, and positioning even more feasible with a higher return
on investment.
 SECTION B (50 MARKS)

QUESTION 3 [CLO 4]

“When Sony introduced the world’s first high-definition television (HDTV) to the Japanese
market in 1990, it was priced at $43,000.”

This helped Sony to scoop the maximum amount of revenue from the various segments of the
market….the price dropped steadily through the years - a 28 inch Sony HDTV cost just over
$6,000 in 1993, but a 40 inch Sony HDTV cost about $1200 in 2007 and only $600 in 2010.”
(Kotler and Keller)

###

a) Explain the pricing strategy that Sony used. (6 marks)

Sony introduced the world’s first high-definition television to Japan. This is undoubtedly a new
product being introduced to the market. The pricing strategy being identified would be price
skimming. Price skimming describes how prices are set high for new products being introduced
and then the prices are progressively lowered. Of course, we recognize this in the case as the
prices were placed at $43,000 initially, then decreased to $6,000 in 1993; $1,200 in 2007; and
$600 in 2010.

b) Outline two (2) advantages and two (2) disadvantages of this approach to pricing.
(10 marks)

Advantages:

Maximize revenue: By charging a premium price for a new product, companies can generate
significant revenue from early adopters and early majority customers who are willing to pay a
higher price for the latest technology. In Sony's case, the high initial price of the HDTV allowed
the company to generate substantial revenue from early adopters in the Japanese market.
Build the brand image: A high price can signal quality and exclusivity, which can help
establish the brand as a leader in the market. Sony's high-priced HDTV helped position the
company as an innovative and cutting-edge brand, which could have contributed to its strong
brand image.

Disadvantages:

Limited market: A high price can limit the market for the product, as many consumers may not
be willing or able to pay the premium price. This could slow the product's adoption rate and
delay widespread market acceptance. Sony's high-priced HDTV may have been out of reach for
many consumers in the early years, limiting the market for the product.

Competition: As competitors enter the market with similar products, they may undercut the
initial high price and erode the company's market share. In Sony's case, as other companies
began to introduce HDTVs, they offered them at lower prices than Sony, which contributed to
the steady decline in the price of Sony's HDTVs over time.

In conclusion, while price skimming can have advantages such as maximizing revenue and
building brand image, it also has disadvantages such as limiting the market and facing
competition. Companies must carefully weigh the benefits and drawbacks of this pricing strategy
when introducing new, innovative products to the market.
c) The use of this approach could be detrimental to a company. Explain three (3) conditions
under which the company should attempt to follow the Sony example.
(9 marks)

Price skimming is not always a suitable pricing strategy for all companies or all products. There
are some conditions under which a company should attempt to follow the Sony example and use
this approach. Here are three such conditions:

The company offers a new and innovative product: Price skimming is most effective when a
company offers a product that is new, innovative, and has a significant competitive advantage. If
a company has a unique and innovative product, it can charge a premium price and recoup its
investment quickly. Sony's introduction of the world's first HDTV was a great example of this.

The target market is price-insensitive: If the company's target market is composed of

customers who are not particularly price-sensitive, then price skimming can be effective. For
example, if the product is targeted at a high-end market that is willing to pay a premium price for
the latest technology, then the company can use price skimming to maximize its revenue. Sony's
HDTV was initially targeted at a Japanese market that was willing to pay a high price for new
and innovative technology.

The company has a cost advantage: A company that has a cost advantage can use price
skimming to generate profits quickly. If the company has lower costs than its competitors, it can
charge a premium price and still make a profit. Sony had a cost advantage when it introduced its
HDTV because it was the first company to develop and produce this new technology, giving it a
competitive edge.

In conclusion, a company should attempt to follow the Sony example and use price skimming
when it offers a new and innovative product, its target market is price-insensitive, and it has a
cost advantage. However, companies should carefully consider the potential drawbacks of this
pricing strategy, such as limited market penetration and competition from other firms, before
deciding to implement it.
QUESTION 4 [CLO 3 & 4]

Grace Kennedy CEO Don Wehby looks to secure a larger foothold in the ethnic market in
Western Canada by next summer. Grace Kennedy has expanded retail space and launched new
products in that market. Consumers are now able to purchase Grace products at Federated
Coop, Walmart and Caribbean specialty supermarkets.

The CEO hopes to secure a bigger share of the ethnic market by summer next year with the
launch of the Grace Jerk Chicken Wings. The product is available in three varieties – hot, mild
and mango honey jerk – forms part of the national expansion of the Grace brand in Canada.

Extract from the Jamaica Gleaner Friday | July 12, 2019

###

(a) Companies such as GraceKennedy go through a number of steps before introducing new
products such as the Grace Jerk Chicken Wings in any market.
List the steps in the new product development process. (10 marks)

Companies like GraceKennedy go through several steps before introducing new products
such as the Grace Jerk Chicken Wings to any market. These steps include:

Idea Generation: The first step in the new product development process is idea generation.
This is where the company comes up with new product ideas that will meet the needs of its
target market. The company can generate ideas from various sources, including customer
feedback, market research, and competitor analysis.

Idea Screening: Once the company has generated new product ideas, it needs to evaluate
them to determine which ones are worth pursuing. Idea screening involves analyzing each
idea's potential to determine whether it aligns with the company's objectives, fits the target
market's needs, and is financially viable.
Concept Development and Testing: The third step is to develop and test the product
concept. The company creates a detailed concept of the new product, including its features,
benefits, and potential market. The concept is then tested with potential customers to gauge
their interest and feedback.

Business Analysis: After the concept has been tested and refined, the company conducts a
thorough business analysis to determine the new product's financial viability. This involves
assessing the costs associated with production, marketing, distribution, and sales, as well as
forecasting the product's potential revenue.

Product Development: Once the company has determined that the new product is viable, it
moves to the product development stage. This involves creating a prototype of the new
product, testing it, and making any necessary modifications to ensure that it meets the
company's quality standards.

Test Marketing: The next step is to conduct test marketing to gauge the product's market
potential. The company launches the product in a limited market to evaluate its performance
and make any necessary adjustments before a full-scale launch.

Commercialization: The final step is commercialization, where the company launches the
new product on a larger scale. This involves developing a marketing and sales strategy,
creating distribution channels, and implementing a launch plan to ensure a successful product
launch.

In conclusion, the new product development process is a crucial step for companies like
GraceKennedy to introduce new products to any market successfully. By following these
steps, the company can ensure that its new products meet the target market's needs, are
financially viable, and are launched successfully.
 (b) Outline the process a consumer in Canada would go through in making the decision to
purchase the Grace Jerk Chicken Wings product. (6 marks)

The process a consumer in Canada would go through in making the decision to purchase the
Grace Jerk Chicken Wings product can be outlined as follows:

Need Recognition: The first stage of the decision-making process is problem recognition. In this
stage, the consumer realizes they have a need or a problem that can be solved by purchasing a
product. The consumer may be looking for a new food item to try, wanting to experience a new
taste, or craving spicy food.

Information Search: After recognizing the need, the consumer starts searching for information
about the product. This information can be gathered from various sources, including online
reviews, recommendations from friends or family, advertisements, and in-store promotions.

Evaluation of Alternatives: Once the consumer has gathered information about the Grace Jerk
Chicken Wings product, they start to evaluate the alternatives. The consumer may compare the
product to other similar food items available in the market based on factors such as price, taste,
convenience, and quality.

Purchase Decision: After evaluating the alternatives, the consumer decides to purchase the
Grace Jerk Chicken Wings product. This decision can be influenced by various factors such as
the product's availability, the consumer's budget, and the product's perceived value.

Post-purchase Evaluation: After purchasing the product, the consumer evaluates whether the
product met their expectations or not. If the product did not meet their expectations, the
consumer may decide not to purchase it again. If the product exceeded their expectations, the
consumer may become a loyal customer and continue to purchase the product.
In conclusion, the decision-making process for purchasing the Grace Jerk Chicken Wings
product in Canada involves problem recognition, information search, evaluation of alternatives,
purchase decision, and post-purchase evaluation. By understanding this process, GraceKennedy
can develop marketing strategies that appeal to consumers at each stage of the decision-making
process and encourage them to choose their product over competitors.

b. Identify the diagram below and describe its purpose in marketing. (9 marks)

Product Life Cycle.

The purpose of the product life cycle is to show the stages of a product existence from beginning
to decline. There are 5 distinct stages; Product development, introduction, growth, maturity, and
decline.

Product development described the investments that go into the innovation of the product, but
no sales have been generated. This is demonstrated by the profit line being below the axis origin,
showing a loss. Customers that engage with the product are known as innovators.

The introduction stage describes the product entering the market and promotional costs are
increased. Sales start off slow and profits are nonexistent at this stage. The consumers that
engage with the product at this stage are know as early adopters.
The growth stage is the third stage and, like the name suggests, the product sales start to
increase rapidly and this is where profit starts to come in. Consumers that engage with the
product at this stage are know as early majority.

The fourth stage is known as the maturity stage and this is where sales peak and grows slowly
and profits slowly declines. Competition also starts to get high at this stage. The consumers that
engage with the product at this stage are know as the late majority.
The final stage is the decline stage and this is where sales decrease and profits dwindle; this can
be combated by a product extension. The consumers that engage with the product at this stage
are known as laggards.

END OF ASSESSMENT