Problem: The reservation prices of three classes of demanders of the cable channels Lifetime, Disney, and ESPN are given below:
Class Lifetime Disney ESPN
30 Year Old Males $ 7 $1 $22
30 Year Old Females $20 $10 $15
7 to 12 year olds $ 3 $21 $12
It costs $6 to produce and distribute each channel. The cable company can sell each separately, sell them as a bundle, or both.
a. What bundling pricing strategy would you recommend?
b. What would be the second best pricing policy?