Perceived price fairness and price decay in the DVD market

Abstract

Purpose – This study aims to examine perceived price fairness, actual pricing and price decay in a short-life cycle market; namely DVD films.

Design/methodology/approach – The prices of six UK retailers for a range of films released over the last 18 months were examined and compared with the perceived perception of fair price of a questionnaire sample of over 500 UK adults.

Findings – Consumers perceive a DVD to lose value of more than 50 per cent in the first year, but this price decay is not reflected in the actual pricing of the DVDs. Prices for newer DVDs are relatively consistent between retailers of the same channel type, but there are large price differentials for older and/or more specialised items.

Research limitations/implications – This study is exploratory in nature, and a larger scale study of the phenomenon of price decay of digital short-life cycle products such as DVDs is desirable.

Practical implications – The findings suggest that there is a considerable gap between actual prices and perceived fair prices of DVDs, especially for older items. DVD producers and retailers may need to consider adjusting their prices to bring them more in line with customer expectations. The large gap between actual prices and perceived fair prices also has important implications for brand management.

Originality/value – So far, no research has been undertaken which investigates perceived fair price and actual pricing of DVDs. Furthermore, the issue of consumer-perceived price decay has largely been ignored in previous research. Both perceptions of price fairness and perceived price decay are important considerations for pricing policies. This study attempts to address this gap.