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ECO - Our only competitor in District 6SW currently provides bundled services

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solution


Question

Question;Our only competitor in District 6SW currently provides bundled services at $84.95. We arecurrently charging a 10% premium over their price, but there are unsubstantiated rumors thatthey are contemplating a 10% price increase. We don?t know their cost structure, so we don?tknow whether their potential price increase is driven by cost increases or is merely a strategicmove on their part.Historically, when we both charge the same price, our market share is about 65%. When wecharge a 10 percent premium over their price, our market share declines to about 60%. Itappears that in those instances where they have charged a 10% premium over our price, ourmarket share is about 70%.Please provide a recommendation regarding whether we should maintain our current price orreduce our price to $84.95. Please factor into your recommendation that we payprogramming fees to providers that amount to $32.50 for each subscriber. In addition,maintenance, service and billing costs are about $7.60 per subscriber. At present, there areabout 110,000 households in the relevant area.

 

Paper#56075 | Written in 18-Jul-2015

Price : $21
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