Question

Dish argues that four channels have low viewership. AMC agrees agrees but says there is customer loyalty for its show like mad men. What method is AMC using to establish or set its price?

Answer 1

AMC must be using the following of the strategies:

1. Differential pricing: It must be charging differently for its different customers on the basis of viewership for the show. Those who are watching the show regularly would be charged less than those who do not. This differential pricing has kept its customers or viewers loyal to the AMC.

2. Viewers only pricing: This technique is like issuing the membership cards to the viewers, who on the basis of their need or desire would ask for different membership plans' subscription yielding them higher discounts over other.

Using both the above methods which is like the third-degree differential pricing as practised by monopolist must have kept the viewers loyal to the channel.