Reference no: EM133299096
A manufacturer of microwaves has discovered a substantial difference between two target segments. Younger adults have less value for high-wattage, as they tend to use microwaves for smaller heating tasks. In contrast, older adults tend to favor high-wattage microwaves as they are frequently employed in daily meal prep. More precisely, the manufacturer has determined the following:
- Younger adults value: a low-wattage microwave at $50 and high-wattage microwave at $90
- Older adults: a low-wattage microwave at $90 and a high-wattage microwave at $130
Suppose there is roughly an equal amount of people in each of these segments, and that the cost of production for both types of microwave is $40. Which of the following strategies, if priced correctly, is likely to generate the greatest profit?
Introduce only a single low-wattage microwave aimed at both demographics
Introduce only a single high-wattage microwave aimed at older adults
Introduce only a single high-wattage microwave, with the intention of selling only the higher-priced version to both segments.
Introduce both a low-wattage microwave aimed at younger adults and a high-wattage microwave aimed at older adults.