1706996846 Afifah Thohiroh

1706088145 Annisa Nur Maulidiyant

1706088284 Belavita Dwi Jayant
1706997155 Devi Arlina
1706997224 Elaine Violche Acanthus
1706088782 Lanni Palmitha S.
1606962251 Madis Saralita

Pink Tax:
Price Discrimination and
Product Versioning Exercises
 SINOPSIS

PINK Situaton Product costs more for a

TAX woman than for a man
The Case
Nail brightening cream

Diana Kelly has to figure out HOW TO

PRICE the product
– in-house price consultancy
– external consultancy
 The Case

In-house consultancy team External consultancy team

• Demographic gender-based • Benefit-based segmentation
segmentation – Combine H&B
– Gender Neutral Product – Separate H/B
– A male and A Female version • Benefit-based segmentation largerly
driven by gender - specific needs
product
 RESERVATION PRICE & CONSUMER SURPLUS
• RESERVATION PRICE is the maximum price that a
consumer is willing to pay for a product.
• CONSUMER SURPLUS is reservation price - actual
price of a product.
• Team provide various scenario for every segmen
 KELLY’S PROBLEM
• Should she offer ONE VERSION of the product or
MORE THAN ONE VERSION?
• What should be the BASIS for the difference
between versions ?
• What PRICE(s) should she charge?
 GENDER BASED SEGMENTATION
Fixed cost
If M/F product M/F = Gender
available → Men buy Neutral
M product, Female Cost=$0.50
buy F product

If M/F product
Reservation price assumption available but the
M/F = Gender price>M&F
Neutral reservation price
→they wont buy

Additonal Assumton :
• Actual Price = Reservation Price
 SCENARIO
Scenario Reservation Reservation Contribution Contribution
Price for Men Price for With 1 Gender- With A Male
(Number of Women Neutral and A Female
Men) (Number of Product
Women) Version of
The Product
Scenario 1 $3.00 (100) $5.00 (100) $600.00 $800.00

• Contribution With 1 Gender-Neutral Product

$3.00 x 200 (M+F) = $600.00 (using the lowest Reservation Price)
• Contribution With A Male and A Female Version of The Product
($3.00 x 100) + ($5.00 x 100) = $800.00 → PINK TAX
 SCENARIO
Scenario Reservation Reservation Contribution Contribution
Price for Men Price for With 1 Gender- With A Male
(Number of Women Neutral and A Female
Men) (Number of Product
Women) Version of
The Product
Scenario 2 $3.00 (5) $5.00 (100) $315.00/ $515.00
$500.00

• Contribution With 1 Gender-Neutral Product

$3.00 x 105 (M+F) = $315.00 (using the lowest Reservation Price)
$5.00 x 100 (F) = $500.00 (using the highest RP, 5 buyers excluded)
• Contribution With A Male and A Female Version of The Product
($3.00 x 5) + ($5.00 x 100) = $515.00 → PINK TAX
 SCENARIO
Scenario Reservation Reservation Contribution Contribution
Price for Men Price for With 1 Gender- With A Male
(Number of Women Neutral and A Female
Men) (Number of Product
Women) Version of
The Product
Scenario 3 $5.00 (25), $5.00 (100) $600.00 $625.00/
$3.00 (75) $800.00

• Contribution With 1 Gender-Neutral Product

$3.00 x 200 (M+F) = $600.00 (using the lowest RP, high Consumer Surplus)
$5.00 x 125 (M+F) = $625.00 (using the highest RP, low Consumer Surplus)
• Contribution With A Male and A Female Version of The Product
➢ ($5.00 x 25) + ($5.00 x 100) = $625.00
➢ ($3.00 x 100) + ($5.00 x 100) = $800.00 → PINK TAX
 SCENARIO
Scenario Reservation Reservation Contribution Contribution
Price for Men Price for With 1 Gender- With A Male
(Number of Women Neutral and A Female
Men) (Number of Product
Women) Version of
The Product
Scenario 4 $5.00 (60), $5.00 (100) $600.00/ $800.00/
$3.00 (40) $800.00 $800.00

• Contribution With 1 Gender-Neutral Product

$3.00 x 200 (M+F) = $600.00 (using the lowest Reservation Price)
$5.00 x 160 (M+F) = $800.00 (using the highest Reservation Price)
• Contribution With A Male and A Female Version of The Product
➢ ($5.00 x 60) + ($5.00 x 100) = $800.00
➢ ($3.00 x100) + ($5.00 x 100) = $800.00 → PINK TAX
Analysis of Exhibit I
1. Mostly, Gender-Neutral Contribution using lowest reservation
price to attract both men and women.
2. If Gender-Neutral Contribution use highest reservation price,
it will give higher profit (scenario 4) but excluded some of
men buyer;
3. The M/F version gives high contribution because,
▪ Women’s RP > Men’s RP so we can use two prices, the
contribution will be higher even if the reservation price
for men is varied.
▪ All buyers included
4. Price for gender neutral should be $5.00 and
5. Price for a M/F product should be $3.00 for Men product,
and $5.00 for Women product (to attract more people).
 BENEFIT BASED SEGMENTATION
Fixed cost
H&B = H/B

If H/B product
available → consumer
will choose higher assumption Cost=$0.50
consumer surplus

Reservation price
Combine H&B >
Separate H/B
 SCENARIO
Scenario Reservation Price for Men Reservation Price for Contribution With 1 Contribution With 2
(Number of Men) Women (Number of Product That Claims Versions: 1 Health and
Women) Both Health and 1 Beauty
Beauty Benefits

Scenario 5 $5.00(60)-health $5.00(100) $600.00/ $720.00/

$3.00(40)-beauty beauty $800.00 $800.00
A large fraction of men
with RP=$5

• Contribution With 1 Product That Claims Both Health and Beauty Benefits
➢ $3.00 x 200 = $600.00 (using lowest reservation price, to give higher consumer surplus)
➢ $5.00 x 160 = $800.00 (using highest reservation price,40 men buyer excluded)
• Contribution With 2 Versions: 1 Health and 1 Beauty
➢ H ($5.00 x 60) + B (($3.00x140)) = $720.00 (beauty product using lowest RP, higher consumer surplus)
➢ H ($5.00 x 60) + B (($5.00x100)) = $800.00 (beauty product using highest RP, 40 men buyer excluded)

BACK TO ASSUMPTION → RP combine HB > RP separate H/B

Analysis of Exhibit II
1. According to assumption :
➢ Combine H&B product using highest
reservation price, and
➢ Separate H/B product using lowest
reservation price,
2. The HIGHEST CONTRIBUTION is COMBINE H&B
with $5.00 price although losing 40 man buyers.
3. Price for combine H&B should be $5.00
4. Price for separate H/B should be $5.00 for
healthy product and $3.00 for beauty product.
 BENEFIT BASED SEGMENTATION

If H/B product Fixed cost

available → consumer M/F = Gender Neutral
will choose higher Cost=$0.50
consumer surplus

assumption
If H/B available, people tend to
Reservation price choose specific product
Combine H&B > so
Separate H/B
UNREALISTIC Reservation price
Combine H&B < Separate H/B
 SCENARIO
Scenario Reservation Price for Men Reservation Price for Contribution With 1 Contribution With 2
(Number of Men) Women (Number of Product That Claims Versions: 1 Health
Women) Both Health and and 1 Beauty
Beauty Benefits

Scenario 6 $5.00 (60) - health or $5.00 (100) - $600.00/ $720.00/

$4.00 for health&beauty beauty or $4.00 $640.00 $800.00
health&beauty

$3.00 (40) - beauty or

health&beauty
A large fraction of men with
RP=$5

• Contribution With 1 Product That Claims Both Health and Beauty Benefits
• $3.00 x 200 = $600.00 (using lowest reservation price)
• $4.00 x 160 = $640.00 (using highest reservation price, 40 men buyer excluded)
• Contribution With 2 Versions: 1 Health and 1 Beauty
• H ($5.00 x 60) + B (($3.00x140)) = $720.000 (beauty product using lowest RP)
• H ($5.00 x 60) + B (($5.00x100)) = $800.000 (beauty product using highest RP, buyer will to pay more
in specific product, but 40 men buyer excluded)
BACK TO ASSUMPTION → RP combine HB < RP separate H/B
Analysis of Exhibit III
1. According to assumption :
➢ Combine H&B product using lowest
reservation price, and
➢ Separate H/B product using highest
reservation price,
2. The HIGHEST CONTRIBUTION is SEPARATE H/B
with $5.00 price although losing 40 men buyers.
3. Price for combine H&B should be $3.00
4. Price for separate H/B should be $5.00 for
healthy product and $5.00 for beauty product.
 CONCLUSION
HIGH CONTRIBUTION ACCORDING TO SCENARIO
Segmentatio Scenario Contribution Profit
n (contribution-
(costxQty))
Gender Contribution With A Male and A Female Version of $800 (200) $800 – (200x$0,5)
based- The Product (scenario 1) =$700
segmentatio Price $5.00 and $3.00
n Contribution With A Male and A Female Version of $800 (200) $800 – (200x$0,5) =$700
The Product (scenario 3) Price $5.00 and $3.00
Contribution With A Male and A Female Version of $800 (200) $800 – (200x$0,5) =$700
The Product (scenario 4) Price $5.00 and $3.00
Contribution With Gender Neutral Version of The $800 (160) $800 – (160x$0,5) =$720
Product (scenario 4) Price higher, $5.00

Contribution With 1 Product That Claims Both Health and $800 (160) $800 – (160x$0,5) =$720
Benefit based- Beauty Benefits (seems Price $5.00
segmentation unrealistic) (seems unrealistic)

Contribution With 2 Version Health and Beauty $800 (160) $800 – (160x$0,5)
Benefits =$720
 CONCLUSION
1. Should she offer ONE VERSION of the product or
MORE THAN ONE VERSION?
➢. Considering the segmentation chosen, Kelly should
offer more than one version.
 CONCLUSION
2. What should be the BASIS for the difference
between versions ?
SEPARATE VERSION, benefit based segmentation.
➢. The highest and realistic contribution;
➢. Strong positioning, because people tend to choose
specific product;
 CONCLUSION
3. What PRICE(s) should she charge?
Segmentation Scenario Price

Benefit based- Contribution With 2 Version $ 5.00 For Healthy product

segmentation Health and Beauty Benefits $ 5.00 For Beauty product
 PINK TAX VS CONCLUSION
1. IF men’s reservation prices are as same as women’s
reservation prices → company can choose gender based
segmentation - gender neutral
2. IF men’s reservation prices are lower than women’s
reservation prices (pink tax) → company can choose
gender based segmentation - separate M/F version
3. In benefit based segmentation pink tax didn’t occur,
because the segmentation is based on benefit, not
gender. But the price of health product CAN’T be higher
than beauty product.
Thank you