Bundle pricing makes sense for cable operators because:
A) customers have a high willingness to pay for some channels and a low willingness to pay for others.
B) customers are more satisfied with more channels being offered.
C) the cost of operation decreases with bundle pricing.
D) the marginal costs of adding additional channels is high.

Question

Quizplus · Accepted Answer

Bundle pricing allows cable operators to group channels together and offer them at a lower overall price. This makes sense because customers have different levels of willingness to pay for certain channels. For example, some customers may be willing to pay more for sports channels, while others may be willing to pay more for movie channels. By bundling these channels together, cable operators can appeal to a wider range of customers and increase overall revenue. Additionally, offering a larger selection of channels can increase customer satisfaction and decrease the likelihood of customers switching to a competitor. The cost of operation may not necessarily decrease with bundle pricing, but the ability to maximize revenue from the available channels is a key benefit.

Bundle Pricing Makes Sense for Cable Operators Because