Abstract
In the market level of low-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 for low-priced products. We find that when premium brands for low-priced products using price strategy to compete with others, the effect is positive to the profitability of premium brands from the long runpsilas perspective, as it does not reduce 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. It is flexible for low-priced premium brands in their price strategy and the price reduction has positive effect to the premium brand profitability.
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