Exercise $2$: Benefits$-$Based Segmentation

Data provided by the external consultancy team

The external consultancy provided Kelly with a different segmentation basis and different scenarios.

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 health$\backslash$&beauty version of the product is the higher of the reservation prices they have for the health version and the beauty version, i$.$e$.,$ reservation price $($health$\backslash$&beauty$)\backslash (=\backslash )$ Max $\backslash (\backslash \{\backslash )$ Reservation Price $($Health$),$ Reservation Price $($Beauty$)\backslash (\backslash \}\backslash )$

$-$ If separate health and beauty versions of the product are available, consumers will buy the version that offers them the higher consumer surplus, i$.$e$.,$ consumers will choose: Max $\backslash (\backslash \{(\backslash )$ Reservation Price $($Health$)-$ Actual Price $($Health$),$ Reservation Price $($Beauty$)-$ Actual Price $($Beauty$)\backslash \}$

What is the best price for Kelly to charge if she has:

$1.$ only one health$\backslash$&beauty version of the product

$2.$ two versions of the product: a health$-$specific version and a beauty$-$specific version

Exhibit $2$

Quantifying when to offer separate health and beauty versions versus only a combined health$\backslash$&beauty version