TEST 3 -CASE STUDY HERBS MAN LIMITED TEAS With the decriminalization of Cannabis Sativa L in Jamaica, Herbs Man Limited was founded in January 2016, with its head office in Nine Miles, St. Ann. Its high grades tea brand was launched in May 2016 with its first branded product being Morning High, a concentrated brew of herbs and honey which went on sale in May 2016. Morning High was positioned as both a tea and as an energy drink. Herbs Man hires twenty (20) persons and has lands in rural St. Ann. Apart from teas, it intends to produce a wide range of products including juices, sweets, pastries and wines. Morning High is the only Cannabis Sativa L. ta on the market in Jamaica. Since its launch, Morning High has seen increase in sales and growth in Jamaica. Although Herbs Man has no direct competition in the Cannabis Sativa L tea market, it is facing tough competition from other green tea and more popular known tea grass making companies locally such as Tetley and Lipton, Salada and Caribbean Dreams. Indeed, since 2020, Herbs Man has seen a decline in its sales and profits for Morning High Teas and wants to extend the tea's product lifecycle. Morning High Tea comprises cannabis leaves which are shredded and place in tea bags which are then place in a sachet. Each tea bag gets it own sachet. The tea is sold in packs of 20 sachets and 48 sachets. The 20 sachet bags pack are sold a bit more expensive than the 48 sachet/bags pack. The teas are delivered to wholesalers and retailers in a carton box containing 100 packs. Morning High Tea products are currently only available in Jamaica, and this increase the risk of operations. Herbs Man is therefore considering doing international marketing. It wants to sell its product in the trading blocs of CSME, NAFTA, the EC and Britain. Herbs Man is positioning its Morning High Tea products as a brand associated with good quality products in order to give it a competitive advantage, but this is having a big impact on the operating costs. To recoup these costs, it could introduce the new teas at a high price and reap fast profits or it could price it economically to build market share. If priced too high, the company might lose sales to competitors and priced too low it might not recoup its prime cost much less indirect costs. Herbs Man is mindful of the fact that while it needs to recoup operating cost and make a profit, recent 2022 market survey shew that customers are not willing to pay too much of an exorbitant price for the cannabis tea despite its quality and novelty. The survey also revealed that there is another company selling cannabis tea. DO ALL QUESTIONS Question 1 Di brand associated with good quality products in order to give it a competitive advantage, but this is having a big impact on the operating costs. To recoup these costs, it could introduce the new teas at a high price and reap fast profits or it could price it economically to build market share. If priced too high, the company might lose sales to competitors and priced too low it might not recoup its prime cost much less indirect costs. Herbs Man is mindful of the fact that while it needs to recoup operating cost and make a profit, recent 2022 market survey shew that customers are not willing to pay too much of an exorbitant price for the cannabis tea despite its quality and novelty. The survey also revealed that there is another company selling cannabis tea. DO ALL QUESTIONS Question 1 a. Differentiate between a good and a service. (3 marks) b. Is Morning High Tea a good or a service? Why? marks) Question 2 a. Identify the levels of packaging for Morning High Tea. (4 marks) b. Assuming High-Grades tea is maturing and going into the decline stage, recommend three strategies that the company can use to extend the product's life cycle. (5 marks) Question 3 2. Discuss three (3) approaches that High-Grades could use to price its product during its expansion phase to other parishes in Jamaica (7 marks) b. Discuss two new product introduction pricing strategies that Herbs Man can use to introduce the High-Grade tea in the Caribbean and Europe. (State three conditions necessary for utilizing each strategy) (10 marks) c. Which strategy would you recommend to High-Grades and why? (3 marks) END OF CASE STUDY 2