Estimating Competitors Reaction Patterns

A competitor's objectives, strategies and strengths and weaknesses explain ils likely actions, and its reactions to moves such as a price cut, a promotion increase or a new product introduction. In addition, each competitor has a certain philosophy of doing business, a certain internal culture and guiding beliefs. Marketing managers need ;i deep understanding of a given competitor's mentality if they want to anticipate how that competitor will act or react.

Each competitor reacts differently. Some do not react quickly or strongly to a competitor's move: they may feel that their customers are loyal; they may be slow in noticing the move; they may lack the funds to react. Some competitors react only to certain types of assault and not to others. They might always respond strongly to price cuts in order to signal that these will never succeed. But they might not respond at all to advertising increases, believing these to be less threatening. Other competitors react swiftly and strongly to any assault. As Unilever has found with its Persil/Omo Power, P & G does not let a new detergent come easily into the market. Many firms avoid direct competition with P & G and look for easier prey, knowing that P & G will fight fiercely if challenged. Finally, some competitors show no predictable reaction pattern. They might or might not react on a given occasion and there is no way to foresee what they will do based on their economics, history or anything else, hi some industries, competitors live in relative harmony; in others, they fight constantly. Knowing how key competitors react gives the company clues on how best to attack competitors or how best to defend the company's current positions,-1

Continue reading here: Customer Value Analysis The Key to Competitive Advantage

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