Abstract
When deciding the means of confronting a competitor, it is necessary to take the long-term influence into consideration. If the long-term influence of confrontation is negative even though market share is maintained in the short-term, holding and expanding market share are difficult. This research focuses on price competition, and its influence on perceived quality and on internal reference price for a brand from the viewpoints of the speed and means of reaction. In the existing literature on price reduction, a negative effect is supposed between price reduction and brand evaluation on the basis of attribution theory. This research points out that a competitive price reduction is likely to cause negative attribution and that the shorter the time lag for a reaction, the more likely is the reaction to cause negative attribution. Moreover, it shows that past competitive reactions and that the similarity in the means of price reduction by the first mover and second mover affect brand evaluation.
