Companies use planned obsolescence as a central marketing strategy to motivate their customers to (re)buy new and upcoming products. These companies try to increase their revenue and profit by reducing the value of a product's older version. While previous literature focuses on companies’ perspectives of strategic choice, economic or ecological impact, and innovation management, this paper highlights the customer's perception of planned obsolescence. In presenting three studies, the paper finds that a planned obsolescence strategy harms customers’ value perception and ultimately their willingness to pay. By adding customer-related evidence to the discussion, the paper questions companies’ planned obsolescence strategies and opens up a potentially rewarding avenue for further research.
In 1954, industrial designer Brooks Stevens referred to planned obsolescence as “instilling in the buyer the desire to own something a little newer, a little better, a little sooner than is necessary” (Adamson and Gordon, 2003). As a central marketing strategy, the objective of planned obsolescence is to stimulate replacement buying among consumers (Guiltinan, 2009). More specifically, planned obsolescence should prompt consumers to buy the newest products by making them incompatible or partially compatible with the old version, and therefore reducing previous versions’ value for the consumer (Miao, 2011). By designing products with short lifespans, companies seek higher revenues and profits in saturated and highly competitive markets (e.g., Gershoff et al., 2012; Levinthal and Purohit, 1989; Stewart, 1959). During the Great Depression, for example, companies put artificial expiry dates on products in order to encourage consumers to buy more or renew their products. Nowadays, in technology-driven markets, one often comes across the strategy of reducing products’ lifecycles by degrading the older and promoting new versions of the same products, such as software programs, computers, and mobile phones. Following rumors about the new attributes of the product, manufacturers launch new versions of their existing products at regular intervals. For example, Samsung and Apple launch the new versions of their mobile phones every year in the spring and late summer, respectively. Although there is some literature on planned obsolescence in different fields, such as economics (e.g., Bulow, 1986; Strausz, 2009; Swan, 1972), strategy (e.g., Utaka, 2000), innovation management (e.g., Bayus, 1988; Fishman et al., 1993; Pantano et al., 2013), and ecological development (e.g., Guiltinan, 2009; Rivera and Lallmahomed, 2016), research on the impact of planned obsolescence on customer behavior is sparse. A summary of planned obsolescence definitions is given in Table 1. It is particularly important to understand consumers’ responses to having to substitute working products after a short period of time, as despite the potential benefits of offering them new product alternatives, prior research shows that factors not directly associated with a product's features or benefits can affect evaluations of fairness, consumer preferences, and product choice (e.g., Ha et al., 2009; Ho and Wu, 2011; Lee et al., 2013). To our best knowledge, there are no studies exploring consumers’ direct reactions to planned obsolescence practices. To fill this void, our study investigated consumers’ assessment of planned obsolescence; in particular, we emphasize the impact of replacement cycles on customer behavior. Our multi-stage quantitative study examined cognitive processing of planned obsolescence from the consumers’ perspective. An additional experiment explored short replacement cycles, finding that this harms the new offer's value, which in turn reduces customers’ willingness to pay.