You are about to launch a brand new smart phone with a vastly superior processor, enabling true "computing" power on a handheld device. The new device will have all the state-of-the-art features to make it competitive with existing models (dual rear cameras, 5G connectivity, 6-inch OLED Display etc). After conducting a careful conjoint study, you learn that you face two potential consumer segments, youths and corporate with the corresponding willingness-to-pay for the device:

Youth value: $525

Corporate value: $800
These numbers take into account each segment's relevant "reference product." The youth segment represents 65% of your market, whereas the corporate segment represents 35% of your market. Your unit costs for supplying the device are $100.

a)  Explain how the pricing decision for your device will affect the composition of the market you serve. In your opinion, how will the choice of price influence your marketing message (e.g., the advertising during the launch)?
b)  Recommend a price and explain how you chose it.

c)  Suppose that subsequent analysis reveals that consumers would value an upgrade of the camera to triple rear cameras and LIDAR. The incremental Willingness-to-pay for the upgraded camera options (relative to dual rear cameras and no LIDAR) are is: Determine the profit-maximizing product line. The product line can potentially include any of the following configurations:

 (1) base device with dual-rear cameras,

 (2) base device with triple-rear cameras, and/or 

(3) base device with triple rear cameras & LIDAR. Recommend which products to sell and their respective prices. It is not possible to target different prices to different customers. Assume for now that the hardware cost to you from this add-on is negligible (i.e., to simplify the calculations, assume the marginal cost of the upgraded camera is zero). Show your work. Hint: there are only 2 segments, so you would offer at most 2 products.

Segment Youth Corporate Triple Rear Cameras 200 350 LIDAR 50 100