The Effect and Strategy of High-Priced Level Premium Brand Products Price Reduction: An Empirical Research to Auto Industry

In the market level of high-priced products, firms that own premium brand, when they are trying to compete with other firms in the industry using price strategy, the implication of price strategy, if from the long run, is a positive or negative signal? This paper use testable empirical research method and systematically investigate the price reduction effect of premium brand. 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. That is, it is necessary for firms that own premium brands to deal with the competition from a totally new insight.