Exercise $3$: Additional Benefits$-$Based Segmentation

Further data provided by the external consultancy team

The external consultancy also wants Kelly to consider some additional scenarios. They think that one of their assumptions may not hold true. This assumption states that:

The consumer's reservation price for a health&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&beauty$)=$max $\{$reservation price $($health$),$ reservation price $($beauty$)\}.$ After all, if the nail brightening cream has a very focused positioning on beauty versus a diffused positioning on health&beauty, consumers who are looking for a beauty benefit may pay more for the beauty$-$specific version. The same may also hold for consumers wanting a health benefit and a health version being offered $($versus a health&beauty version$).$ On the other hand, some consumers may prefer a general product to a specific product.

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

only one health&beauty version of the product

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

Exhibit $3$

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

$($people pay more or pay less for specialized versions$)$

To be filled in by students:

$\backslash$table$[[$Scenario$,\backslash$table$[[$Reservation price$],[$for men$],[($number of men$)]],\backslash$table$[[$Reservation price$],[$for women$],[($number of women$)]],\backslash$table$[[$Contribution with $1],[$product that claims$],[$both health and beauty$],[$benefits$]],\backslash$table$[[$Contribution with $2],[$versions: $1$ health and $1],[$beauty$]]],[$Scenario $6,\backslash$table$[[$$$5\mathrm{.}00(60)$ for health,$],[$$$0\mathrm{.}00(60)$ for$],[$beauty$,$ $$4\mathrm{.}00(60)$