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MKT2206 – Product and Pricing Strategies Final Assessment (35%)
Student Name: ______________________________

Student Number: ______________________________
Please read the instructions below.
• This is an individual exam. • This final assessment is worth 50 marks and 35% of your total
course grade. • Use clearly stated point-form to express your answers. • This is a Case Study
based assessment. Please read the other attachment which includes the Case Study to answer
the following questions. • There are 7 questions – many with multiple parts. You must answer
every question and its related parts. • Please check the course calendar for the due date of
this final deliverable.
Exam Question Values:
/8 /4 /10 /9 / 4 / 4 /11
Question 1: Question 2: Question 3: Question 4: Question 5: Question 6: Question 7:
TOTAL: /50
Question 1 (8 marks)
The OFF! Clip-on ™ is in the introduction stage of the product life cycle. Briefly discuss the
recommended marketing mix strategies for SC Johnson for their new product introduction.
Be sure you apply the product life cycle course content when answering this question.
a) Product (2 marks)
This is a mosquito repellant innovative technology with proven protection against
mosquito. It is a personal gadget characterized odorless smell that can be clipped onto the
belt purse or pant providing head to toe protection from mosquitos without spraying
anything on the skin.
b) Price (2 marks)
The product currently sells for $7.99 at retail. SC Johnson’s marginal cost is $3 and they
sell to retailers such as Walmart and Home Depot for $4.99. It has a positive differential
value of $2.00 per unit.
c) Promotion/Integrated Marketing Communication (2 marks)

It was launched to create awareness with a rating of 90% targeting adults and children.
d) Distribution/Place (2 marks)
It was distributed amongst people living in urban and sub-urban areas and rural areas.
What are the boundaries of price for the OFF! Clip-on ™ product that SC Johnson should
consider when deciding on a consumer price for this new product? Provide the lower price
boundary (a specific number) and the upper price boundary (a specific number) and briefly
explain how you arrived at each number.
a) Lower Price Boundary: record the number and how it is arrived at. Briefly explain
why this number represents the lower price boundary. (2 marks).
Answer
The lower price boundary is 4.99 which is the price that Johnson sells to retailers or whole
sellers such as wallmat and home depot putting into consideration that the cost of
production is 3
(b) Upper Price Boundary: record the number and how you arrived at it. Briefly explain
why this number represents the higher price boundary. (2 marks)
Answer
The Upper Price Boundaries is 7.99 which is the cost of selling to a retail consumer putting into
considerations that the cost of production is $3
a) What pricing strategy does SC Johnson use (neutral, skimming, penetration) for their
OFF! Clip-on ™ product? Briefly explain your thinking. (2 marks)
Answer
The pricing strategy is penetration- The price of Clip-on ™ is low compared to Moskqull
and since it is a new product, it shall penetrate the market easily. It is also targeting a well
market segment (Children and adult)
b) Assume the OFF! Clip-on ™ product’s market is highly elastic. Briefly explain what
this means. (2 marks)
Answer
If the price of Clip-on ™ product goes high and closes above the higher boundary, the
expected number of buyers of the product will gradually reduce and vice versa bearing in
mind the competition from competitors (Moskqull)
c) This course teaches 8 common price segmentation hedges (including Customer

Demographics, Buyer Self-Identification, Product – Engineered, Time of Purchase,
Purchase Location, Volume or Purchase Quantity, Tie-Ins, Two Part Tariffs or
Metering). Choose one hedge that SC Johnson should apply to the OFF! Clip-on ™
product. Briefly explain your thinking. (3 marks)
Answer
Demographic: It targets people of different age (Adults and children) Race, religion,
gender, zone (rural, urban and sun-urban)
d) A key part of the Product Manager’s job is to figure out which are the ideal levers to
use to decrease price sensitivity. Which of the levers (shared cost effect, switching
costs, expenditure effect, difficult comparison effect, prices ending in 9s, fairness
effect, promotional influence, overconfidence in projecting future, framing losses and
gains, reference price effects, anchoring and end-benefit effect) that marketers have
available to influence buyer price sensitivity should SC Johnson use with their OFF!
Clip-on™? Choose one lever and briefly explain your thinking. (3 marks)
Answer
Promotional influence lever: SC Johnson business attempt to inform, persuade, or remind
consumers backing up this levers is because it is targeting at children and adults that are
active and live in suburban and rural areas.
Question 4
SC Johnson distributes their OFF! Clip-on™ product through retailers. They suggest the
retailer sell each OFF! Clip-on ™ for $7.99. The retailer purchases the OFF! Clip-on™ from
SC Johnson for $4.99 (wholesale price) and SC Johnson’s variable costs are $3.00.
a) What is SC Johnson’s contribution margin? (2 marks)
Answer
Contribution margin(c) is derived from subtracting variable cost (v) cost from (price of
product) and in this case
(C = p-v)
i.e 4.99 -3.00
Answer is = 1.99 USD
b) What is the retailer’s contribution margin? (2 marks)

Retailer’s contribution margin is
(C = p-v)
7.99-4.99
Answer is 3.00 USD
c) Determine the volume hurdle for a retailer if they decrease the retail price by 15%?
Please show your calculations for full marks. (5 marks)
Answer
Formula to be used is Volume Hurdle to help illuminate both of the scenarios above.
I've used the Volume Hurdle calculation numerous times to quickly show the high-level
implications of what a price change could mean. Here's what the formula looks like %ΔQ
≥ -ΔCM/(ΔCM + CMi) here Q = Quantity and CM = Contribution Margin (aka Price –
Variable Cost). The subscript i = Initial in all subsequent examples (as in what is my initial
contribution margin right now without making any price changes),
Volume hurdle by reducing price by 15%
Working
Step 1) first, let's compute the CM in the initial state
Selling price 7.99 - cost of production from Johnson 4.99
Difference is= 3
Step 2 :( and what it will be the future state 1)
3-1 =2
Step 3: People targeted = 33.5 million people = no of units (products)
3* 33.5 =100.5million original
100.5 ∕ 2 =50.25million additional after reducing price
Step 4: Reduction of price by 15%Means pricing moving from 7.99 to 6.7915
Answer = (100500000 +50250000 addition of two figures above)
Volume hurdle of product would be =150750000 million
Question 5
SC Johnson is contemplating launching a price promotion using coupons as a new product
introduction tactic to quickly gain awareness and market share.
a) List one benefit of using a price promotion? (2 marks)
Answer
It helps in attracting new customers and help the company increasing cash flow
b) Provide one risk of implementing a price promotion? (2 marks)
Answer
It leads to increased price sensitivity and the customer has to wait for promotional deals to
be announced
The image quality can at sometimes be tarnished
a) SC Johnson’s major competitor in pest repellents, Muskol, initiated a significant
price reduction of 30%. What should SC Johnson do (ignore, accommodate, attack
or defend)? Briefly explain your thinking. (2 marks)
Defend mechanism: by offering discounts and special offers
b) Briefly discuss one risk associated with Muskol initiating such a significant discount.
(2 marks)
It lessens the perceived value of the product

a) Considering the BCG Matrix assessment tool and the information provided in the
case, place these two product lines into the correct BCG quadrant. Briefly explain
your rationale for each decision. (4 marks with the split noted below)
OFF! TM Mosquito Repellent (2 marks)

STAR: with high market share of 65%. The annual growth rate for the Mosquito repellent market
is 15%.
Ziploc® Sandwich Bags (2 marks

DOGS: 1/3rd of the market share (low) and forecasted to only grow up 2-3% per year
Question 7 (continued)
B) For the OFF! Clip-on TM product, calculate the market potential and sales forecast
(using the ATAR model) based on the information provided in the case. Make sure
you include your calculations for full marks. (7 marks with the split noted below)
ATAR Formula = BU (Market Potential) * % awareness * % trial * % availability * %

repeat
Market Potential number (2 marks)

There are 33.5 million Canadians where 47% are living in suburban and rural areas and 70%
of these suburban and rural dwellers are active outdoors.
Sales Forecast number based on initial projected sales and 1 repeat purchase cycle within 6
months of launch date
The letters in the ATAR model stand for
Answer
In this way forecast number is equals to

A = Awareness
T = Trial
A = Availability
R = Rebuy or Repeat
43% would definitely buy, 27% would probably buy, and 20% would likely not purchase. The
survey also confirmed that 35% of interested buyers intend to repeat their purchase with 6 months.
33.5 million Multiply by 43% multiply by 27% multiply 20 multiply 35 %
Answer = 264,127.5

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MKT2206 – Product and Pricing Strategies Final Assessment (35%)

Student Name: ______________________________

c) Promotion/Integrated Marketing Communication (2 marks)

c) This course teaches 8 common price segmentation hedges (including Customer

b) What is the retailer’s contribution margin? (2 marks)

b) Provide one risk of implementing a price promotion? (2 marks)

It lessens the perceived value of the product

OFF! TM Mosquito Repellent (2 marks)

Ziploc® Sandwich Bags (2 marks

ATAR Formula = BU (Market Potential) * % awareness * % trial * % availability * %

Market Potential number (2 marks)

In this way forecast number is equals to

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