Abstract
Previous research in the area of price discounts has generated a rich, but diverse and mixed body of literature. This research examines the role of consumer's brand commitment and product category risk in influencing the nature as well as valence of the inferences generated by consumers in response to price discounts. Our results provide insights regarding how consumers' responses to competitor inducements vary depending upon their brand commitment for the incumbent brand and perceived risk. Furthermore, we show that higher commitment consumers could resist an inducement from a competitor when they are able to generate negative, marketer‐related inferences. Our research suggests that consumers' inferences are critical than pure economic benefits in determining the effectiveness of discounts.