The Effect and Strategy of Premium Brand Color TV Price Reduction to Its Profitability

We find that using when premium brands using price strategy to compete with others, the effect is negative to the profitability of premium brands from the long run, as it reduces the profitability and premium ability of the brands that firms have built for a long time (Qiu et al. 2006). Then, how if the middle-level priced premium brand products reduce their prices and what will be the effect to the brand in the long run? We use color TV as an example and using the empirical research by interviewing customers and investigate the middle-level priced premium brand TVs price reduction effect on its profitability. Our results show that, the price reduction of middle-priced premium brand TVs, the effect is double-sided and the determinants of the direction of the effect is the price level in the group.