Exercise $1$: Demographic $($Gender$-$Based$)$ Segmentation

Data provided by the in$-$house consultancy team

The in$-$house team has provided Kelly with the data below, to decide whether to offer a gender$-$neutral version of the product or two separate $($male and female$)$ versions of the product. Exhibit $1$ shows four scenarios in terms of the market for the nail brightening cream. The different scenarios reflect the reservation price $($the maximum price a consumer is willing to pay$)$ for the nail brightening cream.

Kelly needs to determine what price to charge if she has:

$1.$ only one gender$-$neutral version of the product

$2.$ two versions of the product: a male$-$specific version and a female$-$specific version

Assuming that:

$-$ Cost$=\backslash$$$0\mathrm{.}50$ and also that the fixed cost of having a male and female version is about the same as having a gender$-$neutral version.

$-$ The consumer's reservation price for a gender$-$neutral version of the product is the same as her $($his$)$ reservation price for a female $($male$)$ version of the product.

$-$ If male and female versions of the product are available, the males buy the male version and the females buy the female version $($and they will not buy the product if the price of the version for their gender is more than their reservation price$).$

$-$ If there is a male and female version of the product, but the price of the male $($female$)$ version is more than a male's $($female$\text{'}$s$)$ reservation price, they will not buy the product.

What should Kelly do$?$

Exhibit $1$

Quantifying when to offer a male and female version

versus only a gender$-$neutral version

To be filled in by students: