Selective discounting as a strategy.

General Instructions:

After you read the Time Warner Case Study, take a look at the accompanying 13 Memos.

Take a quick review of all the memos to get a “feel” for the general issues involved.   Your mission,  should you decide to accept it,  is to tackle the following memos:

3, 5, 11,  and 12.

Please answer directly and be to the point.  An economy of style is appreciated but that does not mean you have to skip over points you deem pertinent.    Please note:  You are not required to look up journal literature to answer the questions.   However,  you may use the internet as a tool to help you answer the questions in the same way you may use the textbook and your notes.  Enter the memo responses by number in BB.   You can attach a Word file or enter your answer directly into the text box.

Memo 3 will set the stage for answering the other memos. The remaining memos, 5, 11 and 12 are concerned with various aspects of competitive strategy and pricing.

In memo 5,  you are asked about selective discounting as a strategy.

In memo 11,  besides calculating the optimal ala carte prices,  please answer why some special interest groups would be opposed to bundling and instead insist on ala carte pricing.    On the other hand,  please discuss why the Cable company is opposed to ala carte pricing and instead insists on bundling.  Is there any way to appease these select special interest groups.

Memo 12 is a Network externality question.  Here,  competition is putting pressure on existing networks and legacy pricing approaches.

Good luck,  and may the Economic force be with you.