Occasional exercisers and competitive runners

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Reference no: EM134035425

Question

A manufacturer of a wearable fitness tracker has identified two groups of consumers for its product: occasional exercisers and competitive runners. Occasional exercisers, on average, have lower values for fitness trackers than competitive runners. Additionally, occasional exercisers attribute almost no extra value to a "friends" feature that lets you keep track of and compete with other users, while competitive runners, on average, value the friends feature. There is no additional cost to incorporating the friends feature. The manufacturer is considering introducing two different models. The manufacturer has determined that occasional exercisers value a fitness tracker without the friends feature at $70 and one with the friends feature at $80, while competi-tive runners value the two versions at $80 and $150. If there is an equal number of occasional exercisers and competitive runners, what pricing strategy will yield the greatest revenue? What if competitive runners comprise the bulk of consumers?

Reference no: EM134035425

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