The reservation prices of three classes of demanders of Cable Channels Bravo and Disney are given below:
Class Bravo Disney
30 Year Old Adults $11 $5
12 to 15 year olds $ 8 $9
3 to 7 year olds $ 9 $10
It cost $4 to produce and distribute each Channel. The cable company can sell each separately, sell them as a bundle, or both.
a. What pricing strategy would you recommend?
b. How much more profitable is the best strategy compared to the next best?.
Here is the answer:
(a) There are two type of strategy that can be adopted. The first strategy is to sell the cable channels in a bundle to every one at a price of $16 ...
The types of strategy are assessed.