Revenue Management in the Context of Movie Theaters: is it Fair?

Document Type

Article

Publication Date

10-17-2014

Publication Title

Journal of Revenue and Pricing Management

Volume

14

Issue

2

First page number:

72

Last page number:

83

Abstract

Certain industry characteristics (for example, a relatively fixed capacity, varying and uncertain demand, and perishable inventories) are a prerequisite for a successful implementation of revenue management (RM) practices. Although movie theaters have these characteristics, they have failed to try RM as a pricing strategy. The current study examines the joint impact of five potential RM practices (that is, rate fences) and framing effects (surcharge versus discount) on consumers’ price fairness perceptions. Several rate fences (morning-versus-noon, weekday-versus-weekend and time-of-booking-based pricing) received relatively high fairness ratings, whereas location-based and popularity-based pricing were perceived as less fair. In addition, framing ticket prices as a discount rather than a surcharge significantly improved customers’ price fairness perceptions. The findings of this study provide guidance for movie theater operators in their pursuit of optimal pricing.

Keywords

Revenue Management; Pricing; Perceived Fairness; Movie Theater

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