A longitudinal study on Australian online DVD pricing
| Pages | 60-67 |
| Date | 27 February 2009 |
| DOI | https://doi.org/10.1108/10610420910933371 |
| Published date | 27 February 2009 |
| Author | Hongyi Li,Fang‐Fang Tang,Liang Huang,Fiona Song |
| Subject Matter | Marketing |
Pricing strategy & practice
A longitudinal study on Australian online DVD
pricing
Hongyi Li
Department of Decision Sciences and Managerial Economics, Chinese University of Hong Kong, Shatin NT, Hong Kong
Fang-Fang Tang
China Center for Economic Research, Peking University, Beijing, China
Liang Huang
Department of Decision Sciences and Managerial Economics, Chinese University of Hong Kong, Shatin NT, Hong Kong, and
Fiona Song
ANU College of Arts & Social Sciences, Australian National University, Canberra, Australia
Abstract
Purpose – The purpose of this paper is to analyze the online DVD market in Australia, which has not been researched so far, and to examine whether
the pricing patterns in this market exhibit any regularity consistent or inconsistent with research findings in other markets.
Design/methodology/approach – A longitudinal data set of 27,030 price observations were collected weekly over one year. Various statistical tests
– in particular, a least-squares dummy variable (LSDV) panel data model with serial correlation – were applied to the data.
Findings – In general, the online branches of multi-channel retailers have higher average prices and standard deviations than pure internet retailers.
Overall, market prices decrease over time significantly within the sample period – about 17.4 per cent decrease for all titles, however, with popular
titles’ prices decreasing faster than those of random titles. Furthermore, prices do not seem to converge between the two types of online retailers. For
individual retailers, brand name effect seems to matter in the results, with a significant difference on prices.
Research limitations/implications – This is an empirical study on a specific market. More data, testing and comparison are needed for any
generalization of the findings whether they are consistent in the global sense.
Practical implications – Online marketers of different types of retailers may need to reflect on their pricing policies whether their pricing strategies
have any space for improvement on profitability.
Originality/value – This study investigates the price movement of the Australian online DVD market using data collected over a one year time span.
Keywords Internet shopping, Retailers, Pricing policy, Australia, Consumer goods
Paper type Research paper
Introduction
The rapid development of online retailing has inspired a fast
growing research interest in studying the online pricing
evolution (see, e.g. Pan et al., 2004, and Xing et al., 2006 for
recent reviews). This study adds to the literature a new
research on the pricing behavior and dynamics in the
Australian online DVD market, with a data set of 27,030
price observations collected weekly over a year. To our
knowledge, this is the first systematic study on the Australian
online DVD market from such a perspective.
More specifically, this research note contributes to the
literature by comparing pricing behaviors of two types of
online retailers – pure Internet retailers (hereafter
DOTCOMs) and online branches of multi-channel retailers
(hereafter OBMCRs), and focusing on the differences in
their:
.average prices;
.price dispersions;
.dynamics of prices; and
.dynamics of price dispersions.
We also address some other important issues such as price
convergence, brand loyalty, as well as pricing strategies. In
particular, the note attemptsto answer the following questions:
.Do OBMCRs and DOTCOMs charge the same price?
.Do the prices of OBMCRs and DOTCOMs disperse
similarly?
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
18/1 (2009) 60–66
qEmerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610420910933371]
The work described in this paper was fully supported by a grant (No.
CUHK4310/02H) from the Research Grants Council of the Hong Kong
Special Administrative Region, China, and a direct grant from the Faculty
of Business Administration of the Chinese University of Hong Kong.
Fiona Song is grateful to the Department of Marketing in the Chinese
University of Hong Kong for the hospitality during her visit.
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