Product Line Pricing: Part 2 Recall the pricing consulting proj ect you conducted for a client on the All-in-One Printer market (see Group HW3). This question now requires you to confront and think about the challenges of product line pricing in practice. This example is more complicated than the ones we studied in lecture. Based on the previous conjoint analysis, the client is interested in exploring segmented pricing. Since targeting different prices to different customers for the same printer would be logistically complicated, the client would prefer to launch a product line with multiple printer versions. Currently, HP and Epson each sell a 16 PPM printer without wireless camera connectivity for $129. HP is planning to discontinue this model and introduce 2 new models: (i) 30 PPM printer without wireless camera connectivity; (ii) 25 PPM printer with wireless camera connectivity. Epson will not introduce a new model. The marginal cost of the current Epson model is $50. The client is trying to assess how these new product introductions will change the pricing landscape. The HP 30 PPM printer has a marginal cost of $100 while the HP 25 PPM printer with wireless camera connectivity has a marginal cost of $75. To assess demand for these models, use the results of the conjoint study. For your convenience, I have included the regression coefficients for the three segments as well as the segment sizes (as a percent of the total population of target customers) below. Segment A Segment B Segment C Intercept 65.05 45.6 65.83 Price -0.21 -0.14 -0.12 PPM: 25 10.81 12.83 17.67 PPM: 30 15.98 21.73 28.29 Wireless Connectivity 6.84 36.17 14.34 Epson -13.25 -3.14 4.62 Canon 5.15 -3.9 -13.46 Market Share 40% 35% 25% Questions 1 . Similar to the previous homework, convert the regression results into dollar values. Then, calculate the optimal prices for the two HP models. Construct a table with HP 30 PPM, HP 25 PPM with wireless camera connectivity, and Epson as column headers and the rows Optimal Price, Market Share, Profit. Assume that: (a) Epson will continue to price the base model at $129 (put this in your table) and the HP base model (16PPM) will be discontinued (not available). (b) If a segment is indifferent between brands, 1/2 the customers buy one brand and 1/2 of the customers purchase the other brand. This is a difficult problem to solve manually. So don't give up. Consider scenario analyses to understand the difficulties of coordinating a product line. Go through the various scenarios of which segments you want to sell each of the products and see how you would need to price in each of those scenarios. You can do this by hand. You could also do this in Excel (or R) to facilitate how you see the trade-offs between different pairs of prices for each of the two models