4 . Individual Problems 14-1

Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of consumers who purchase its dolls: low-value consumers and high-value consumers. Each of the low-value consumers tends to purchase one doll and one accessory, with a total willingness to pay of $64. Each of the high-value consumers buys one doll and two accessories and is willing to pay $124 in total.

Mattel is currently considering two pricing strategies:

	Strategy 1: Sell each doll for $32 and each accessory for $32
	Strategy 2: Sell each doll for $4 and each accessory for $60

In the following table, indicate the revenue for a low-value and a high-value customer under strategy 1 and strategy 2. Then, assuming each strategy is applied to one low-value and one high-value customer, indicate the total revenue for each strategy.

	Revenue from Low-Value Customers	Revenue from High-Value Customers	Total Revenue from Strategy
$64 Value, 1 Accessory	$124 Value, 2 Accessories	($)
($)	($)
Strategy 1
$32 doll + $32 accessory
Strategy 2
$4 doll + $60 accessory

The strategy that generates the most revenue is strategy .