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Jakob Littel

Feb 20, 2025

A manufacturer of microwaves has discovered that female shoppers have little value for microwaves and attribute almost no extra value

A manufacturer of microwaves has discovered that female shoppers have little value for microwaves and attribute almost no extra value to an auto-defrost feature. Male shoppers generally value microwaves more than women do and attribute greater value to the auto-defrost feature. There is little additional cost to incorporating an auto-defrost feature. Since men and women cannot be charged different prices for the same product, the manufacturer is considering introducing two different models. The manufacturer has determined that men value a simple microwave at $82 and one with auto-defrost at $148, while women value a simple microwave at $66 and one with auto-defrost at $82.
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Hermina Ferry

Feb 20, 2025

For simplicity, assume there is only 1 man and 1 woman and that if the price of a microwave is equal to an individual’s willingness to pay, the individual will purchase the microwave.If the number of male and female buyers is the same, then the best pricing strategy is to offer 2 different microwaves (option 3). One simple and cheap microwave for women and one with auto-defrost for men.Strategy                     Revenue           Revenue             Total Revenue                                   from men          from women        from strategy1. Auto-Defrost             $82                      $82                   $164Microwave only at $822. Auto-Defrost           $148                     $0                     $148 Microwave  only at $1483. Simple                      $131                    $66                    $197Microwave at $66,Auto-Defrost Microwave at $131Suppose that, instead of one man and one woman, the market for this microwave consisted entirely of men. For simplicity, you can assume this means that there are two men, and no women. Under these conditions, pricing strategy 2. Auto-Defrost Microwave  only at $148 would maximize revenue for the manufacturer.... Show More
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